Oil prices stabilized after the United States and Iran revealed that talks on the nuclear program of the OPEC member state were positive, with progress being made in finding common ground.
The global benchmark Brent crude settled above $67 a barrel with little change after ending Tuesday's session down about 2%, while West Texas Intermediate crude traded near $62.
Tehran said it had reached a general agreement with Washington on the terms of a possible deal, while a US official said Iranian negotiators were scheduled to return to Geneva with a new proposal in two weeks.
Geopolitical tensions versus oversupply concerns
Crude oil prices have risen this year as geopolitical concerns, including tensions over Iran, have outweighed warnings that the global market faces a surplus that could put downward pressure on prices.
Tensions with Iran, which saw a wave of anti-government protests in January, have raised concerns among traders that oil production or vital supply routes such as the Strait of Hormuz could be affected if military confrontations break out.
U.S. Vice President J.D. Vance said on Tuesday that talks with Iran were going well, but the country had not yet acknowledged U.S. President Donald Trump's red lines.
The apparent diplomatic progress came despite escalating military activity. Iran announced on Tuesday that it would close part of the Strait of Hormuz, a crucial chokepoint for energy exports from the world's largest oil-producing region, for several hours due to military exercises. The United States also dispatched a second aircraft carrier to the area.
Awaiting the results of the Russia-Ukraine negotiations
Elsewhere, investors followed the US-sponsored negotiations between Ukraine and Russia, which are also being held in Geneva.
Discussions are scheduled to continue on Wednesday, according to an aide to Ukraine's chief negotiator. Any resolution to Moscow's war with its neighbor could lead to a relaxation of sanctions, potentially boosting oil flows to global markets.
Trading volumes during Asian hours may be lower than usual on Wednesday, due to the Lunar New Year holiday in several countries. This includes the trading hub of Singapore and China, the world's largest oil importer.
In the latest trading, Brent crude futures for April settlement rose slightly to $67.75 a barrel at 8:07 a.m. London time. West Texas Intermediate crude futures were trading at $62.63 a barrel.
