From $68 to $100: Analyst decodes how diplomatic talks may sway oil prices
In an extreme conflict scenario, Brent could feasibly spike above $100/bbl, as the market accounts for the loss of Iranian supply and the increased costs of rerouting global flows
Mohammed Imran Mumbai Stalled diplomacy keeping oil market nervous
The high-stakes diplomatic manoeuvrings between Washington and Tehran reached a critical juncture on February 26, 2026, as the latest round of indirect negotiations in Geneva concluded without a definitive breakthrough. Despite intensive mediation by Omani Foreign Minister Badr Al Busaidi and reports of "significant progress" from Iranian Foreign Minister Seyed Abbas Araghchi, the global energy market remains on edge. With a transition to technical-level talks in Vienna scheduled for next week, the spectre of a diplomatic collapse continues to cast a long shadow over international trade and maritime security.
Diplomatic deadlock: Red lines and intractable hurdles
The negotiations, spearheaded by US envoys Steve Witkoff and Jared Kushner, are operating under an aggressive timeline set by President
Donald Trump. While Iranian President Masoud Pezeshkian has signaled optimism regarding "good prospects" for a resolution, the core demands of both nations remain fundamentally polarised
The US mandate is uncompromising: the permanent dismantling of the Fordow, Natanz, and Esfahan nuclear facilities, the total export of enriched uranium to the United States, and a zero-enrichment policy devoid of sunset clauses. Conversely, Tehran views these demands as existential threats to national sovereignty. Iran maintains that comprehensive sanctions relief is a non-negotiable prerequisite, while the US has offered only marginal concessions. Furthermore, Washington’s insistence on curbing Iran’s ballistic missile program and regional proxy support—elements the Supreme Leader deems "red lines"—continues to fuel a deep-seated mutual mistrust.
Maritime turbulence: VLCC rates and the shadow fleet
The diplomatic friction has manifested acutely within global shipping and logistics. The tanker market is currently experiencing severe structural strain; rates for Very Large Crude Carriers (VLCC) on the critical Middle East-to-China routes have tripled since the onset of 2026, exceeding $1,50,000 per day—the highest levels recorded since 2020.
Compounding this volatility is the status of Iran’s "shadow fleet," which accounts for approximately 18 per cent of global tanker capacity. Recent US measures have targeted 86 per cent of these vessels, complicating seaborne flows and significantly increasing insurance premiums. For global manufacturers and exporters, particularly in Asia, these escalating freight costs are no longer a peripheral concern but a direct threat to margin stability and supply chain integrity.
The Hormuz factor: A ticking economic time bomb
The vulnerability of the Strait of Hormuz remains the primary "tail risk" for the global economy. As a conduit for 20 per cent of global LNG and nearly 30 per cent of total crude oil flows, any disruption to this chokepoint would be catastrophic. Recent live-fire drills conducted by Iran served as a stark reminder of the regime's ability to sever global trade arteries.
We believe that a full disruption of the Strait would trigger an unprecedented surge in freight and insurance costs, potentially rising by 200 per cent to 400 per cent. Such a scenario would not only spike energy prices but would also induce a broader inflationary shock, strain the fiscal health of net energy importers, while shifts in market share to benefit alternative suppliers like Saudi Arabia.
Crude oil outlook
As the focus shifts to Vienna, the crude oil market is currently pricing in a "wait-and-see" premium. Our technical and fundamental outlook identifies three distinct pathways for the remainder of the quarter:
The Status Quo (Baseline): Current tensions have injected a $4–$6 per barrel geopolitical risk premium, maintaining Brent crude at approximately $71/bbl and WTI between $64–$66/bbl.
The Diplomatic Breakthrough: A successful technical agreement in Vienna would likely lead to an immediate "price collapse" of the war premium. However, the downside would be limited by Opec+ discipline, with a probable floor established near $68/bbl.
The escalation scenario: Should talks collapse, the risk of military engagement or a formal blockade increases. Disrupting Iran's 1.6–3.3 million barrels per day of exports would likely add an immediate $8–$12/bbl to current prices. In an extreme conflict scenario, Brent could feasibly spike above $100/bbl, as the market accounts for the loss of Iranian supply and the increased costs of rerouting global flows.
(Disclaimer: This article is by Mohammed Imran, research analyst. Mirae Asset Sharekhan. Views expressed are his own.)
 "From $68 to $100: Analyst decodes how diplomatic talks may sway oil prices")
