[MARKET ANALYSIS] Crude edges higher heading into high-stakes US-Iran talks on Saturday

Oil rose for a second consecutive session after Saudi Arabia said attacks on energy infrastructure had reduced its production capacity, with Brent climbing above USD 96/bbl. Despite the rebound, both benchmarks remain on course for their largest weekly loss since June, following Tuesday’s ceasefire announcement. WTI Jun trades towards the top of a USD 89.58-91.52/bbl intraday range, whilst Brent Jun resides towards the upper end of a USD 96.03-97.95/bbl parameter at the time of writing. Dutch TTF, meanwhile, is modestly softer intraday but off this week’s lows. Capital Economics expects the unusual WTI premium over Brent, which reflects near-term supply tightness, to normalise in the coming months if the ceasefire holds.
In geopolitics, the focus is on weekend talks between the US and Iran in Islamabad, Pakistan. The diplomatic picture remains complicated, however. US President Trump said he was "optimistic" about a deal but threatened Tehran over reported fees being levied on tankers in the Strait of Hormuz, adding that Iran was doing a "poor job" of allowing energy supplies to flow despite ceasefire commitments. He also asked Israeli PM Netanyahu to scale back attacks on Lebanon, amid concerns the fighting could undermine negotiations - a view echoed by both Iran and ceasefire mediator Pakistan, which have described Israel's Lebanon offensive as a truce violation.
In terms of the talks themselves, both sides are sending senior officials, including US Vice President JD Vance and Iran's Parliament Speaker Ghalibaf, alongside Foreign Minister Araghchi, signalling high-level engagement if the talks go ahead. Negotiators are expected to focus on sharply conflicting proposals, with the US pushing a 15-point framework that includes strict nuclear limits, an end to proxy support and the reopening of the Strait of Hormuz, while Iran's 10-point plan calls for security guarantees, recognition of its right to enrich uranium, control over Hormuz transit and a halt to Israeli operations in Lebanon.
Key obstacles include the dispute over whether the ceasefire covers Hezbollah, the risk of an Iranian boycott and disagreements over access to Hormuz. In scenario terms, the best case would be a temporary extension of the ceasefire and an agreement to keep negotiating, while the worst case would see the talks collapse quickly, triggering renewed escalation, including possible US strikes on Iranian infrastructure. Friction between the two sides is expected.