WTI traded near $65.00 a barrel in Asian hours on Thursday, after a 4.9% fall in the prior session. Prices stayed supported by supply risk linked to US-Iran tensions and stalled Ukraine-Russia talks.
US-Iran discussions remained unresolved, with Tehran reporting a “general agreement” on the framework of a possible nuclear deal. US officials said Iran did not meet US conditions, and US President Donald Trump said military action remains possible, with reports suggesting it could become a prolonged campaign.
Geopolitical Risks Support Prices
Reuters reported that two days of peace talks in Geneva between Ukraine and Russia ended without progress. Ukrainian President Volodymyr Zelenskiy said Russia was delaying US-mediated efforts to end the four-year war, while Russian forces continued strikes on energy infrastructure and battlefield advances.
In trade flows, India’s state-run Bharat Petroleum Corporation Limited bought Venezuelan crude for the first time. HPCL Mittal Energy Limited also bought Venezuelan cargoes for the first time in two years, Reuters cited sources.
The American Petroleum Institute said US weekly crude stocks fell by 0.609 million barrels last week. This partly reversed the previous week’s 13.4 million-barrel increase, the largest build since January 2023.
Looking back to early last year, we saw WTI oil prices holding around $65 a barrel primarily because of significant supply risks. Tensions between the US and Iran were high, and the conflict in Ukraine showed no signs of ending, which kept a floor under the market despite some volatility in inventory data. This environment created a baseline of geopolitical risk that we have been pricing in ever since.
Throughout the second half of 2025, prices firmed up after OPEC+ signaled a more aggressive stance on production cuts to defend the $70 price level, pushing WTI into a $75-$80 range for several months. Those geopolitical risks from Iran and Russia never fully disappeared, but the market’s focus shifted toward the supply discipline from the producer group. We saw this reflected in declining global inventories through last year’s Q3 and Q4 reports.
Demand Signals Challenge The Bull Case
Now, in February 2026, the narrative is being challenged by fresh concerns over global demand. Recent manufacturing PMI data from China came in at 49.2, below the 50-point mark that separates expansion from contraction, fueling fears of a slowdown in the world’s largest oil importer. This weak data point is causing us to question if OPEC+ supply cuts can offset a genuine drop in consumption.
The latest Energy Information Administration (EIA) report from this week supports this cautious view, showing a surprise crude oil inventory build of 4.2 million barrels, against expectations of a minor draw. This is the third consecutive weekly build, a pattern suggesting that supply is starting to outpace demand in the near term. This contrasts sharply with the large drawdowns we saw late last year.
For the coming weeks, the tension between bearish demand signals and bullish geopolitical supply risks suggests heightened volatility. We should consider strategies that benefit from price swings, such as purchasing straddles or strangles, to capitalize on market uncertainty. Selling short-dated call options with strike prices above $80 could also be a viable strategy to generate income, assuming demand fears keep a lid on any potential rallies.
