The United States and Iran are set to resume nuclear negotiations in Geneva on Feb. 26, with Omani mediators signaling a renewed diplomatic push to finalize a deal. The talks come against the backdrop of a significant US military buildup in the Middle East and increasingly explicit warnings from President Donald Trump that Tehran faces a narrowing window for agreement. Markets are closely watching the outcome, as energy prices, regional stability, and global risk sentiment hinge on whether diplomacy prevails over escalation.

Diplomacy Under Pressure

Iranian Foreign Minister Abbas Araghchi confirmed he expects to meet US special envoy Steve Witkoff in Geneva, expressing optimism that a “win-win” solution remains achievable. Omani Foreign Minister Badr Albusaidi described the upcoming session as an opportunity to “go the extra mile” toward finalizing an agreement, suggesting momentum has not entirely stalled.

However, Washington’s public stance complicates the tone. President Trump recently indicated he is considering limited strikes should talks fail, while setting a deadline of roughly 10 to 15 days. The US has deployed two aircraft carriers and additional military assets to the region, the largest buildup in years, reinforcing the credibility of potential action.

The central sticking point remains uranium enrichment. Witkoff has stated that “zero enrichment” would be a non-negotiable US condition, while Tehran insists enrichment is its sovereign right and that its program is peaceful. These conflicting positions illustrate how far apart the sides remain on core principles, even as negotiators search for technical compromises.

Market and Energy Implications

For financial markets, the talks intersect directly with commodity pricing and geopolitical risk premiums. Oil has rallied in recent weeks amid fears that conflict could disrupt flows through the Strait of Hormuz, a vital chokepoint for global petroleum shipments. A diplomatic breakthrough could ease upward pressure on energy prices, while a breakdown might amplify volatility across crude, equities, and currencies.

Beyond energy, the International Atomic Energy Agency’s board meeting on March 2 introduces another layer of risk. Diplomats may consider censuring Iran or referring the issue to the United Nations Security Council, potentially escalating sanctions or diplomatic isolation.

Additionally, reports that Iran agreed to a €500 million arms deal with Russia underscore the broader geopolitical entanglements influencing negotiations. Such developments could harden positions in Washington and complicate consensus-building in Geneva.

Strategic Stakes and Forward Outlook

The current environment reflects a delicate balance between coercive leverage and diplomatic engagement. While military signaling may strengthen the US bargaining position, it also raises the cost of miscalculation. For Iran, securing sanctions relief and economic stability remains a powerful incentive, yet domestic political considerations constrain flexibility.

Investors and policymakers alike will focus on whether negotiators can draft a framework that narrows the enrichment dispute while satisfying verification demands. Even a limited interim agreement could reduce immediate conflict risk and temper commodity volatility.

If talks collapse, however, the region faces renewed instability with potential spillovers into global markets. As deadlines converge and rhetoric intensifies, Geneva represents more than another diplomatic round — it is a pivotal moment in determining whether 2026 is shaped by negotiated containment or escalating confrontation.