More Stories

Informist, Thursday, Feb. 26, 2026

 

By Ashutosh Pati

 

MUMBAI – The focus of the crude oil market is now fully on the talks between Iran and the US, scheduled Thursday, with analysts expecting a gradual unwinding of the risk premium on the commodity if the two sides arrive at a constructive resolution. The current risk premium of $5-$10 per barrel in crude oil prices could be reversed, analysts said. However, if the negotiations hit an impasse, prices could rise further.

 

Crude oil prices have already risen around 8% in a month, largely on fears of US military action against Iran. US representatives Steve Witkoff and Jared Kushner are scheduled to meet an Iranian delegation for the third round of talks Thursday in Geneva, Switzerland. Tuesday, Iran's Foreign Minister Abbas Araghchi said an agreement with the US is "within reach, but only if diplomacy takes precedence".

 

In his State of the Union address to a joint sitting of the US Congress late Tuesday, President Donald Trump said he would prefer to resolve differences with Tehran through diplomacy, even as he laid out his case for a potential attack on Iran, which he claimed was seeking to develop missiles that could strike the US.

 

"A constructive resolution would likely prompt the market to gradually unwind as much as a $10/bbl risk premium, which we believe is currently priced in," analysts at ING said in a report. "If talks break down, the upside risk remains, but the market may hold off on a full reaction until the scale of potential US action against Iran becomes clearer."

 

Some analysts expect Thursday's meeting to be fruitful while others see it failing. At 1312 IST, the most-active May futures contract of West Texas Intermediate Crude on NYMEX were steady at $65.38 per barrel. The same month contract of Brent Crude on the Intercontinental Exchange was up 0.2% at $70.82 per barrel.

 

Analysts at ANZ Research expect the current $5-$10 per-barrel geopolitical risk premium embedded in crude oil prices to be reversed if a deal is reached between the US and Iran. "Talks have ramped up in recent weeks, raising the possibility that an interim deal could be reached," they said. The possibility of more Iranian crude oil flowing into the market after a deal could also result in prices falling below $60 a barrel, they added.

 

However, the ANZ analysts' base-case scenario remains that negotiations between the two sides will fail. "Previous attempts to reach a deal have failed, and the market's expectations of a deal have been slowly falling, as both sides hold fast to their positions on the suspension of uranium enrichment," they said.

 

If that happens, it could result in US military strikes on Iranian military and nuclear facilities. Iran is then likely to retaliate against US assets in the region. This could lead to a "sudden spike" in crude oil prices of $5-$10 per barrel and prices would remain highly volatile as long as tensions persist, the analysts said. Any attacks targeting Iran's oil export facilities would put more than 1.5 million barrels per day of Iranian crude oil exports at risk, the analysts at ANZ said.

 

Ajay Kedia, director of Kedia Advisory, said, "It (the talks) should fail because US agenda seems to be for regime change because since last one year conflicts (are) going on... Iran is making a deal with China for missiles, doesn't seem that this issue would be resolved immediately."

 

Kedia said Brent crude oil prices could move as high as $82-$84 per barrel if the talks fail and military action begins. In the event of a deal, prices may fall to $60-65 per barrel. "Market is cautious for the next 24 hours," he added.

 

Kunal Shah, vice-president and head of commodities research at Nirmal Bang Securities Pvt. Ltd., is more optimistic and expects the two countries to reach a deal Thursday, which could pull down crude oil prices by $3-$4 per barrel.

 

The greatest risk of a US military strike lies in a possible blockade of the Strait of Hormuz. "Depending on the duration of the disruption to shipping, this would lead to a noticeable tightening of oil supplies and a sharp decline in inventories," Carsten Fritsch, commodity analyst at Commerzbank AG, said in a report. Crude oil prices would then rise significantly. "According to a calculation by Bloomberg, the price increase could be four times the percentage decline in supply," Fritsch said.

 

The ANZ analysts expect oil prices to surge to over $90 per barrel if the strait is at risk. As per their scenario, the threat to the Iranian regime would trigger "retaliatory action, initially focused on US military assets in the region but possibly escalating to attacks on oil tankers in the Strait of Hormuz".

 

The Organization of the Petroleum Exporting Countries is likely to act and stabilise the market if something like this happens by lifting production quotas and increasing output, according to analysts. "If supply disruptions emerge, we would expect OPEC to release spare capacity from Saudi Arabia, UAE and Kuwait/Iraq," according to the ANZ analysts.

 

Fritsch said Saudi Arabia, Iraq, and the United Arab Emirates in particular have sufficient spare production capacity, in case of a supply disruption.  End

 

US$1 = INR 90.90

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Rajeev Pai

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.