Oil prices hit seven-month highs as tensions rise before US-Iran talks

Oil prices have reached seven-month highs, as traders reacted to heightened tensions between the US and Iran ahead of nuclear talks this week.US crude futures rose to $67.28 a barrel on Monday, while Brent crude touched its highest level since 31 July at $72.50 a barrel. Prices fell back late in the session, but were up again on Tuesday morning, approaching Monday’s highs.James Hosie, a research analyst at Shore Capital, said oil markets were “rationally trying to price in a risk premium for oil prices, given the disruption a conflict could have on global supplies”.“The risk of possible military escalation in the Middle East is gaining traction, and thus, traders appear to hedge against worst-case scenarios,” said Priyanka Sachdeva, a senior market analyst at Phillip Nova. She added that the current prices were “largely driven by anticipation rather than actual supply loss”.Washington and Tehran are set to hold a third round of nuclear talks in Geneva this Thursday, as confirmed by Oman’s foreign minister on Sunday.The negotiations are a sign that Donald Trump’s team believe Iran is amenable to diluting its stockpile of highly enriched uranium and giving up its nuclear programme. Iran has denied it is trying to develop atomic weapons.On Monday, Trump said in a Truth Social post it would be a “very bad day” for Iran if it did not make a deal.Before the negotiations, both countries have engaged in shows of military force, with the US bolstering its military assets in the Middle East over the weekend.On Monday, the aircraft carrier USS Gerald R Ford arrived at the island of Crete, Greece. The USS Abraham Lincoln is already positioned in the Arabian Sea near Oman, carrying fighter jets and more than 5,630 sailors.On Monday, the US partially evacuated its embassy in Beirut after a security review on risks of military escalation in the region.