Oil prices bounced higher this week as traders tracked the ongoing developments in U.S.–Iran nuclear talks, with geopolitics once again overshadowing fundamentals.
The key catalyst remains uncertainty out of Geneva. If negotiations collapse, Iranian oil stays constrained under sanctions and the risk of Gulf disruptions grows - both supportive for prices. But a deal that allows Iranian barrels back onto the market would likely erase much of the current risk premium.
On the fundamental side, the Energy Information Administration reported a massive 16-million-barrel build in U.S. crude inventories for the week ended Feb. 20, pushing stockpiles to 435.8 million barrels. That’s still about 3% below the five-year seasonal average, but the headline number was notably bearish.
Despite the large crude build, price reactions were muted - a sign that traders are more focused on geopolitics than weekly data. An unusually high EIA “adjustment factor” added further noise to the report, complicating the supply-demand picture.
Meanwhile, OPEC+ is weighing a modest 137,000 barrel-per-day production increase for April, though another pause remains possible. Key producers are set to meet March 1.
Right now, geopolitics is driving the bus. A breakdown in talks could push crude higher by expanding the risk premium. But if a framework agreement emerges and Iranian supply returns, today’s gains could unwind quickly, especially with U.S. inventories climbing and demand showing signs of strain.
In short: the next headline out of Geneva may matter more than the next inventory report!
As suggested in last weeks blog fuel card prices will increase sharply this week, in the region of 2.6 pence per litre as we head into the first week of March.
Fuel Market Update 20/02/2026
Oil Surges on Rising U.S.–Iran Tensions and Key Court Decision Risk
Oil prices began the week on a weaker footing amid renewed optimism over a potential nuclear deal between the United States and Iran. However, sentiment shifted sharply in the second half of the week, with oil prices rallying as geopolitical tensions between Washington and Tehran intensified, injecting fresh uncertainty into global energy markets.
A report from Axios suggested that the prospect of a military conflict between the United States and Iran appears increasingly likely. According to sources cited in the report, there is currently no sign of a diplomatic breakthrough, and frustration is growing within the administration of Donald Trump.
The report noted that recent U.S. military build-up and escalated rhetoric may make it difficult for the White House to de-escalate tensions without Iran offering significant concessions on its nuclear program. Any potential military operation, according to the sources, would likely be extensive, potentially involving a weeks-long campaign resembling a full-scale war rather than a limited strike.
The oil market is highly sensitive to geopolitical risk especially when it involves Iran. The primary concern is the security of the Strait of Hormuz, a narrow waterway through which roughly one-fifth of the world’s oil supply flows every day.
Any disruption to shipping in this critical chokepoint could severely constrain global supply, triggering sharp price increases. Even the threat of disruption is enough to push traders into defensive positioning.
As a result, traders have been aggressively adding long oil positions to hedge against the risk of potential weekend developments, when markets are closed but geopolitical events can still unfold.
Interestingly, the Axios report also mentioned that U.S. officials have given Iran a two-week window to return with a detailed proposal following recent talks. This timeline echoes a familiar pattern. In past confrontations, similar deadlines have preceded rapid escalations, reinforcing traders’ perception that the current situation could reach a decisive point quickly.
Whether this deadline leads to renewed diplomacy or further escalation remains uncertain, but the compressed timeframe is contributing to heightened market anxiety.
Beyond geopolitics, oil markets are also watching a major economic catalyst: a potential ruling from the Supreme Court of the United States on Trump-era tariffs. If the court rules against the tariffs, it could improve global growth expectations by easing trade tensions. Stronger growth typically translates into higher oil demand, which would likely support further gains in crude prices.
In contrast, if tariffs remain in place, growth expectations could remain subdued, limiting upside in oil.
Fuel card prices for next week are expected to rise by 0.6ppl; however, there is a risk of a significant increase in the first week of March if oil prices remain elevated.
