Oil prices hover near seven-month highs on US-Iran tensions

LONDON: Oil prices hovered near seven-month highs on Tuesday, with traders assessing risks to supply from any military escalation as another round of U.S.-Iran nuclear talks loomed.

Brent crude futures were up 38 cents, or 0.5%, at $71.87 a barrel at 1427 GMT, while U.S. crude futures climbed 40 cents, or 0.6%, to $66.71 a barrel.

Brent is trading at its highest since late July, while WTI is at its firmest since early August. Iran and the U.S. will hold a third round of nuclear talks on Thursday in Geneva, Oman’s Foreign Minister Badr Albusaidi said on Sunday.

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The United States wants Iran to give up its nuclear programme, but Iran has adamantly refused, and denied it is trying to develop an atomic weapon.

The State Department is pulling out non-essential government personnel and their families from the U.S. embassy in Beirut, a senior State Department official said on Monday, amid growing concerns about the risk of a military conflict with Iran, which, in turn, is close to a deal with China to purchase anti-ship cruise missiles, according to sources.

U.S. President Donald Trump said in a social media post on Monday that it will be a “very bad day” for Iran if it does not make a deal.

“The risk is not necessarily that war is the base case, but that escalation becomes difficult to unwind once positioning and expectations are elevated,” SEB analysts said in a note.

“That is the uncomfortable dynamic currently underpinning the geopolitical premium in oil.”

Meanwhile, the U.S. imposed a new tariff from Tuesday of 10% on all goods not covered by exemptions, the U.S. Customs and Border Protection said, rather than the 15% President Donald Trump promised last week a day after announcing a 10% rate.

On the supply front, trading houses and buyers of Venezuelan oil have chartered the first very large crude carriers (VLCCs) to export from the South American country since a Caracas-Washington supply deal began, which is set to speed up shipments from March while boosting deliveries to India, according to sources and data.