Oil prices fell on Thursday after US crude inventories recorded their largest increase in three years, alongside signs of weakness in the physical market, as traders assessed whether talks between the United States and Iran could prevent a military conflict that may threaten supply.

Brent crude futures declined to $70.03 per barrel, down 82 cents or 1.16% by 10:21 GMT. US West Texas Intermediate crude fell to $64.63 per barrel, losing 79 cents or 1.2%.

Sharp Rise in US Inventories

Data from the US Energy Information Administration showed that US crude inventories rose by 16 million barrels last week — the largest weekly increase in three years — adding direct pressure on prices.

Giovanni Staunovo, analyst at UBS, said weakness in the physical North Sea market is weighing on prices, noting that markets are closely watching the outcome of the third round of US-Iran talks scheduled for Thursday. The North Sea physical market serves as the pricing benchmark for Brent crude futures.

Despite the recent pullback, oil prices remain up about 15% since the start of 2026, as fears of military escalation between Washington and Tehran have outweighed expectations of a potential supply surplus.

Diplomatic and Military Developments

US envoy Steve Witkoff and Jared Kushner are set to meet an Iranian delegation in Geneva.

Brent prices had reached their highest level since July 31 on Monday after Washington increased its military presence in the Middle East to pressure Iran into negotiations aimed at ending its nuclear and missile programs.

Any prolonged conflict would threaten supply from Iran — OPEC’s third-largest producer — in addition to exports from other countries in the region.

OPEC+ Moves and Saudi Plans

Sources familiar with the matter said OPEC+ may consider increasing production by around 137,000 barrels per day in April, preparing for peak summer demand and aiming to benefit from price support driven by geopolitical tensions.

Other sources indicated that Saudi Arabia is boosting oil production and exports as part of a contingency plan in case a potential US strike on Iran disrupts Middle Eastern supplies.

Risk Premium

Analysts at ING said the outcome of US-Iran nuclear talks will be critical in determining price direction. They added that any constructive agreement could lead markets to reduce a risk premium estimated at around $10 per barrel, which they believe is currently priced into oil markets.

The Japanese yen rose on Thursday as investors assessed the latest signals from the Bank of Japan regarding the interest-rate path, while also monitoring Nvidia’s earnings for clues about demand for artificial intelligence technologies.

The yen gained 0.2% against the US dollar to 155.99, on track to break a two-day losing streak after Governor Kazuo Ueda kept the possibility of near-term rate hikes on the table.

Mixed Signals from Tokyo

In an interview with the Yomiuri newspaper, Ueda said the central bank will evaluate incoming data at its March and April meetings to determine the direction of monetary policy. His remarks came days after reports suggested Prime Minister Sanae Takaichi had voiced concerns about further monetary tightening during a meeting with the governor.

David Chao, global market strategist for Asia-Pacific at Invesco, said the Bank of Japan is “walking a tightrope,” but he still expects two rate hikes this year, forecasting the yen to be among the top-performing currencies.

Meanwhile, the Japanese government appointed two academic members widely seen as strong supporters of economic stimulus to the central bank’s board.

Board member Hajime Takata also warned about the risks of inflation exceeding target levels, calling for gradual interest-rate increases.

Limited Reaction to Nvidia Results

Despite strong earnings from Nvidia, futures for both the S&P 500 and Nasdaq slipped 0.1% each, reflecting a lack of clear shift toward risk appetite.

The US Dollar Index, which tracks the greenback against a basket of six major currencies, was steady at 97.678.

Federal Reserve Outlook

Markets continue to price in a pause in interest rates at the upcoming Federal Reserve meeting. According to the CME FedWatch tool, futures currently reflect a 98% probability of rates remaining unchanged at the March 18 meeting.

US 10-year Treasury yields rose slightly by around 0.2 basis points to 4.0518%.

Political and Trade Risks

Uncertainty remains over how US President Donald Trump will respond to the Supreme Court ruling on February 20 that invalidated the emergency tariffs he previously imposed.

US Trade Representative Jamieson Greer said tariff rates on some countries could rise to 15% or more instead of the current 10%, without specifying which countries would be affected.

Geopolitics Back in Focus

Markets are also watching a new round of nuclear negotiations between the United States and Iran in Geneva aimed at resolving the long-running dispute.

Economists at Goldman Sachs said geopolitical developments — including tensions in the Middle East, uncertainty surrounding a potential Russia–Ukraine peace agreement, and fragile US–China relations — remain key risks.

Major Currency Moves

The euro was steady at $1.18, while European Central Bank President Christine Lagarde said policymakers expect inflation to stabilize around 2% soon.

The British pound fell 0.3% to $1.35, with traders focused on local elections in Manchester seen as a key test for Prime Minister Keir Starmer and the Labour Party.

In China, the offshore yuan rose 0.3% to 6.8344 per dollar — its strongest level in nearly three years — despite signals from the central bank indicating a desire to limit rapid currency appreciation.

Gold prices rose in European trading on Thursday, extending gains for a second consecutive session and holding near a four-week high, supported by renewed safe-haven demand ahead of US-Iran nuclear talks scheduled to begin later today in Geneva.

The rally was also supported by weakness in the US dollar in the foreign-exchange market, despite declining expectations that the Federal Reserve will cut interest rates in March. Markets are still waiting for additional signals on the direction of US monetary policy throughout the year.

Price Overview

Gold prices today: Gold climbed 0.8% to $5,205.91 per ounce, up from the session opening level of $5,165.55, while recording an intraday low of $5,155.73.

At Wednesday’s settlement, gold prices rose 0.45%, resuming gains after a brief pause driven by correction and profit-taking from a four-week high of $5,249.88 per ounce.

US–Iran Talks

US envoy Steve Witkoff, alongside Jared Kushner, son-in-law of President Donald Trump, is scheduled to meet an Iranian delegation in Geneva later today for the third round of talks concerning the nuclear الملف, reflecting continued diplomatic efforts despite rising tensions.

Trump had hinted during his State of the Union address on Tuesday at the possibility of striking Iran, stressing that he would not allow — in his words — “the world’s largest sponsor of terrorism” to obtain a nuclear weapon, highlighting a tougher stance on the issue.

US Dollar

The US Dollar Index declined 0.15% on Thursday, extending losses for a second session, reflecting continued weakness in the US currency against a basket of major and minor currencies.

The decline followed increased market uncertainty after Trump’s State of the Union speech, which failed to provide reassurance regarding trade policy stability following the Supreme Court decision that invalidated previous tariffs.

US Trade Representative Jamieson Greer said on Wednesday that tariff rates on some countries could rise to 15% or more compared with the recently imposed 10%, without specifying trading partners or offering further details.

US Interest Rates

• Federal Reserve Governor Christopher Waller said he is open to keeping interest rates unchanged at the March meeting if February labor market data suggest employment conditions have “stabilized” after weaker performance in 2025.

• According to the CME FedWatch tool, markets currently price a 95% probability that interest rates will remain unchanged in March, while the probability of a 25-basis-point cut stands at 5%.

• To reprice those expectations, investors are closely monitoring upcoming US economic data along with comments from Federal Reserve officials.

Gold Outlook

Carlo Alberto De Casa, analyst at Swissquote Bank, said that ongoing tensions between the United States and Iran, combined with global economic uncertainty driven by President Trump’s tariff policies, are supporting gold prices.

He added that global demand for gold has not yet faded, noting that overall sentiment remains positive, with strong buying from Asia and central banks.

SPDR Gold Trust

Gold holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased by 3.43 metric tons on Wednesday, marking the third consecutive daily increase and lifting total holdings to 1,097.62 metric tons, the highest level since April 26, 2022.

The euro rose in European trading on Thursday against a basket of global currencies, moving in positive territory for a second consecutive day versus the US dollar, supported by weakness in the US currency amid uncertainty surrounding President Trump’s tariff policies.

The euro’s gains come ahead of European Central Bank President Christine Lagarde’s testimony before the European Parliament in Brussels, where her comments are expected to provide fresh clues on the path of European interest rates throughout this year.

Price Overview

• Euro exchange rate today: The euro rose about 0.2% against the dollar to 1.1829, compared with an opening level of 1.1810, after recording an intraday low at 1.1804.

• The euro ended Wednesday’s session up 0.3% against the dollar, marking its third gain in the past four days, supported by recovery buying from a four-week low at 1.1742.

US Dollar

The dollar index fell 0.15% on Thursday, extending losses for a second straight session, reflecting continued weakness in the US currency against a basket of major and minor currencies.

This decline followed President Donald Trump’s State of the Union address to Congress, which increased market uncertainty as it failed to provide sufficient reassurance about trade policy stability after the Supreme Court invalidated previous tariffs.

The US Supreme Court ruled on Friday that the emergency tariffs imposed by President Donald Trump were invalid. In response, Trump activated new tariffs under a rarely used law known as “Section 122,” which allows duties of up to 15% but requires congressional approval to extend them beyond 150 days. Trump said he would use the 150-day window to develop new tariffs that comply with legal frameworks.

US Trade Representative Jamieson Greer said on Wednesday that tariff rates on certain countries could rise to 15% or higher, compared with the recently imposed 10% rate, though he did not specify which trading partners would be affected.

European Interest Rates

• Money market pricing for a 25-basis-point rate cut by the European Central Bank in March remains stable around 25%.

• Traders have adjusted expectations from keeping rates unchanged throughout this year to pricing in at least one 25-basis-point cut.

Christine Lagarde

To reprice those expectations, investors later today will closely watch ECB President Christine Lagarde’s testimony before the European Parliament’s Economic and Monetary Affairs Committee, scheduled to begin at 08:30 GMT.

Euro Outlook

At FX News Today, we expect that if Lagarde’s comments come in more hawkish than markets currently anticipate, expectations for ECB rate cuts this year would decline, leading to further gains in the euro against a basket of global currencies.