Oil prices continued their pre-holiday upward trend and accelerated gains during the Spring Festival period. Brent crude futures rose by 4.1%, reclaiming the $70 per barrel level, while the WTI benchmark also increased by over 4%, settling above $65. The price surge was partly attributed to the latest EIA data, which showed significant declines in both U.S. crude and refined product inventories. Crude stocks fell by 9.014 million barrels week-on-week, gasoline inventories decreased by 3.213 million barrels, and distillate fuel stocks dropped by 4.566 million barrels. Additionally, geopolitical tensions were a major driver behind the oil price increase.

The second round of negotiations between the United States and Iran, held from February 17 to 18, reached a stalemate with no consensus on core issues. Subsequently, on February 19, the U.S. issued an "ultimatum," warning that it might take "further military action" if an agreement is not reached within a specified timeframe. On February 23, U.S. media cited a former CIA intelligence officer stating that the U.S. could launch a military strike against Iran on February 23 or 24. Sources indicated that the administration is "inclined to conduct an initial strike (against Iran) in the coming days," followed by a larger-scale military operation in the following months to pressure Iran into "submission" and compel it to agree to U.S. terms. This has further elevated geopolitical risk premiums.

Negotiations surrounding the Iranian nuclear deal have persisted for years without substantial progress. In May 2018, the U.S. administration declared the Iran nuclear agreement reached under the previous administration as one-sided and incapable of ensuring peace, announcing its withdrawal from the deal and imposing sanctions on Iran. Over the subsequent eight years, reports repeatedly suggested that an agreement was imminent, but no breakthrough materialized. Diplomatic relations between the two countries have primarily evolved through three phases.

During the first term of the previous U.S. administration, the U.S. reinstated sanctions on Iran and refused engagement, causing bilateral relations to freeze. After the change in U.S. leadership, indirect talks resumed with mediation from the EU and other nations, yielding some technical progress. However, fundamental disagreements persisted, leading to another stalemate. In April 2025, the U.S. and Iran held their first talks since the previous administration's return to power. Negotiations were later interrupted following Israeli airstrikes on Iran. In early 2026, talks resumed at the U.S. administration's request. As the third round of negotiations approaches, significant differences remain between the two sides.

Meanwhile, major institutions have recently released their February reports, adjusting supply and demand expectations. The market continues to face a supply surplus. On the supply side, the OPEC monthly report indicated that production among 12 OPEC members decreased by 135,000 barrels per day in January, mainly due to output declines in Iran and Venezuela. The nine members participating in output cuts increased production by 40,000 barrels per day month-on-month. The eight OPEC+ members implementing additional cuts maintained output below their quotas, indicating an orderly supply release.

Venezuela's crude production fell by 87,000 barrels per day in January, primarily due to export disruptions and field shutdowns caused by U.S. sanctions. Recently, the U.S. Treasury Department has issued licenses to international traders such as Vitol and Trafigura, allowing them to transport Venezuelan oil and accelerating the country's crude exports. The EIA expects Venezuela's production to recover to around 1 million barrels per day in the second quarter, with potential for further supply growth as sanctions continue to ease.

Regarding market balance, both the EIA and IEA maintain that the market remains oversupplied. The EIA forecasts a global surplus of 3.1 million barrels per day in 2026, narrowing to 2.7 million barrels per day in 2027.

Overall, market trading continues to revolve around Iran nuclear negotiations. The coming weeks will be critical for Middle East developments, and oil prices are expected to remain highly volatile. Investors are advised to exercise caution and manage risks accordingly.