Global oil markets are currently navigating a period of intense volatility, with benchmarks hovering near seven-month highs. Geopolitical tension in the Middle East remains the primary driver of this upward momentum, as traders price in a significant risk premium despite a looming supply surplus in the United States. **Price Performance and Benchmarks** As of late February 2026, Brent crude futures are trading near **$71.00** per barrel, marking its highest level since July. Similarly, West Texas Intermediate (WTI) has surged toward **$66.00**, levels not seen since early August. Both benchmarks have gained approximately **8%** over the past month, reflecting heightened anxiety over potential regional supply disruptions. **Geopolitical Drivers** The spotlight remains on high-stakes negotiations between the U.S. and Iran in Geneva. While Iranian officials have signaled that a deal to avert conflict is "within reach," the U.S. has maintained a formidable military presence in the region, including two aircraft carriers and over **1,200** missiles. This "military posturing" acts as a double-edged sword: it keeps the market on edge regarding a potential strike on nuclear facilities while the diplomatic track attempts to deflate the **$3–$4** per barrel geopolitical risk premium currently embedded in prices. **U.S. Inventory Surge** Tempering the price rally is a massive and unexpected build-up in U.S. crude inventories. Latest data from the Energy Information Administration (EIA) reveals a spike of **16 million barrels** in a single week, bringing total commercial stocks to **435.8 million barrels**. This represents the largest weekly increase in three years, starkly contrasting with analyst expectations of a modest **1.5 million-barrel** rise. **Market Outlook and Constraints** The market is currently caught between two opposing forces. On one side, the risk of conflict in the Strait of Hormuz—a transit point for **20%** of global oil—threatens to send prices soaring. On the other, a softening global demand outlook and rising production are creating a "super glut" narrative. The IEA has recently lowered its 2026 demand growth forecast to **850,000 barrels per day**, while global supply is projected to rise by **2.4 million barrels per day**. For now, geopolitical "optionality" is winning the tug-of-war against physical oversupply. Traders are increasingly paying high premiums for options that protect against sudden price spikes, even as major banks like Goldman Sachs maintain long-term forecasts that see Brent eventually drifting back toward the **$60** range later this year.