Although talks continue, the Middle East prepares for a military strike: File Image/Pixabay

Oil trading’s most common driver, fear, was said to be behind Friday’s price rise of over 2 percent, as the U.S. and Iran prepared for further nuclear talks next week – and U.S. military build up in the Middle East remained intact.

Brent settled up $1.73, or 2.4 percent, at $72.48 per barrel; West Texas Intermediate settled up $1.81, or 2.7 percent, at $67.02.

Even those very same circumstances caused a modest price dip in the previous session, Tamas Varga, analyst at PVM, said,  “Uncertainty prevails, fear is pushing prices higher today; it is completely driven by the outcome of the Iranian nuclear talks and possible military action the U.S. might take against Iran.”

Suvro Sarkar, analyst at DBS, added, “We think the latest round of talks offers some hope on chances of a peaceful resolution, but military strikes are in no way out of the equation.”

Meanwhile, sources told media that the United Arab Emirates’ Abu Dhabi will export more of its flagship Murban crude in April and boost output to soften the impact of a strike.

Simultaneously, Saudi Arabia hiked output and exports as part of a contingency plan should a U.S. attack on Iran disrupt flows through the Strait of Hormuz; the kingdom’s shipments jumped to about 7.3 million barrels per day (bpd) in the first 24 days of February, the highest since April 2023.

Friday also saw J.P. Morgan stating that despite the geopolitical tensions, “protracted disruptions to oil supply are unlikely.”

Natasha Kaneva, head of global commodities strategy at J.P. Morgan, then reiterated a familiar concern: “Our balances continue to project sizable surpluses later this year, suggesting that voluntary and involuntary production cuts will be needed to prevent excessive inventory accumulation…this would help stabilize Brent prices at around $60/bbl.”

A Reuters poll of 34 analysts and economists published Friday held that Brent will average $63.85 per barrel this year, $1.50 per barrel more than projections made a month ago; and WTI will average $60.38 per barrel, up from $58.72 expected in January.  

Currently, the geopolitical risk premium already baked in the price of oil is about $4-$10 per barrel, analysts say.