Oil hovers near seven-month highs ahead of US-Iran talks

WASHINGTON: Oil prices edged higher on Wednesday, as investors weighed the threat of military conflict between the US and Iran that could disrupt supply and a big build in US crude inventories.
Brent futures were up 6 cents at $70.93 per barrel at 09:57 GMT. WTI futures rose 4 cents to $65.91 per barrel.
Brent prices reached their highest since July 31 on Friday, while WTI hit its highest since August 4 on Monday, as the US positioned military forces in the Middle East to try to compel Iran to negotiate an end to its nuclear and ballistic missile programme.
An extended conflict could disrupt supplies from Iran, the third-biggest crude producer in the Organisation of the Petroleum Exporting Countries and other countries in the key Middle East producing region.
Supporting oil prices, US President Donald Trump briefly laid out his case for a possible attack on Iran in his State of the Union speech on Tuesday, saying he would not allow a country he described as the world's biggest sponsor of terrorism to have a nuclear weapon.
'This uncertainty means the market will continue to price in a large risk premium and remain sensitive to any fresh developments', ING commodities strategists said on Wednesday.
US envoys Steve Witkoff and Jared Kushner are due to meet an Iranian delegation for a third round of talks on Thursday in Geneva.
Iran's Foreign Minister Abbas Araghchi said on Tuesday that a deal with the US was 'within reach, but only if diplomacy is given priority'.
'Trump has warned that without a deal, there will be 'very bad consequences'. Whether (Iran's) concessions will meet the US's 'zero enrichment' red line remains to be seen', Tony Sycamore, IG market analyst, said in a note.
Amidst the heightened tensions, Iran has accelerated talks to purchase Chinese anti-ship cruise missiles, according to sources, which could target the US naval forces that have assembled near the Iranian coast.
While geopolitical tensions have supported prices, the market is also contending with concerns of large inventory gains as global supply exceeds demand.
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