Oil prices hovered just below their highest levels in roughly seven months on Tuesday, with Brent crude edging around $71.40 a barrel and U.S. West Texas Intermediate futures near $66.20. This came after a volatile session that saw prices test their strongest levels since mid‑2025, as traders balanced geopolitical risk with broader market drivers.

Geopolitical Drivers and the U.S.–Iran Dialogue

Markets are laser‑focused on the resumption of nuclear talks between the United States and Iran, scheduled for later this week in Geneva, which could influence supply risk perceptions. Iranian cooperation on nuclear issues has been elusive, and heightened rhetoric from U.S. officials has underscored the geopolitical complexity. Persistent tensions in the Middle East, including concerns about potential conflict escalation and disruptions to shipping through the Strait of Hormuz, traditionally one of the world’s most critical energy chokepoints, are also contributing to risk premia in crude pricing.

Despite these risks, traders appear reluctant to push the market decisively higher without clearer evidence of actual supply disruption. Recent analysis suggests that a sustained break above the long‑standing trading range — roughly $55–$66.50 per barrel for Brent — would be needed to signal a new bullish trend.

Trade Policy Uncertainty Clouds Demand Outlook

Another important element tempering the oil rally is renewed uncertainty around U.S. trade policy. After a recent Supreme Court ruling disrupted aspects of the government’s authority to impose emergency tariffs, the administration signaled intentions to implement broader import duties under alternative statutes. This has resurfaced tariff risk across global supply chains, dampening risk appetite in assets sensitive to global economic growth — including commodities such as crude oil.

Higher or unpredictable tariffs can slow global trade and compress demand for energy, particularly in manufacturing and transport sectors. For oil markets, where sentiment is fragile, any sign of weakening demand prospects can offset bullish geopolitical narratives and limit upside. This dynamic helps explain why oil prices have paused near recent highs rather than extending gains.

Fundamentals, Volatility and Market Positioning

Beyond geopolitics and trade, oil markets continue to digest fundamentals such as inventories, OPEC+ production decisions, and macroeconomic indicators. While crude benchmarks have shown strength over the past month, they remain below peak levels seen a year ago, suggesting that any advance is being met with profit‑taking and cautious positioning. Volatility around key support and resistance levels also reinforces a range‑bound market character, with traders reluctant to commit large directional bets absent clearer catalysts.

In addition, external factors including fluctuating demand forecasts linked to global growth trends and the balance of supply from major producers are likely influencing positioning and hedging activity by energy market participants.

Looking ahead, oil markets remain sensitive to both geopolitical developments and evolving policy signals from Washington and other capitals. Further clarity on the outcome of the U.S.–Iran talks could either alleviate risk premia and push prices back toward recent highs or, conversely, dampen prices if tensions ease materially. Meanwhile, updates on trade policy and macroeconomic indicators — especially U.S. economic data and OECD demand forecasts — will be critical in shaping crude’s near‑term trajectory. Participants should also monitor OPEC+ production decisions and inventory data from major consuming regions, which could either anchor prices in a range or provide impetus for breakout moves.