Oil prices jumped on Wednesday after US Vice President JD Vance said Tehran did not address Washington's red lines during nuclear agreement talks between the two.
Brent, the global benchmark for crude, was up 4.81 per cent at $70.66 a barrel as of 4pm ET. West Texas Intermediate, which tracks US crude, gained 5.15 per cent at $65.54 a barrel.
Mr Vance told Fox News on Tuesday, after a second round of Oman-moderated talks held in Geneva, that Iran was “not yet willing to actually acknowledge and work through” President Donald Trump's red lines. Among those red lines are that Iran must not be able to obtain a nuclear weapon, Mr Vance said.
The US also wants Iran to end its nuclear enrichment programme, which Tehran says is non-negotiable.
For years, Iran has sought relief from sweeping sanctions imposed by the US, and insists any deal must result in economic benefits. Foreign Ministry deputy director for economic diplomacy Hamid Ghanbari said on Sunday some areas of common interest include oil and gasfields, mining and aircraft purchases.
Mr Vance on Tuesday said that while progress was made in the most recent round of talks, Mr Trump still “reserves the ability to say when he thinks diplomacy has reached its natural end”.
“The President of the United States is very much trying to find a solution here, whether it's through diplomatic options or through another option, that means the Iranians cannot have a nuclear weapon,” he said.
Iranian Foreign Minister Abbas Araghchi told state television that Tehran has reached a “general agreement on a set of guiding principles”.
Meanwhile, Iranian media reported that Iran and Russia were to conduct joint navy drills in the Gulf of Oman and the Indian Ocean. This comes after Iran temporarily closed the Strait of Hormuz – a strategic waterway for oil and gas exports – while conducting military drills.
About a fifth of the world's total oil consumption passes through the Strait of Hormuz, although experts have said the temporary closure would result in only minor delays.
A second US aircraft carrier strike group was expected to arrive in the region. The US has already sent the USS Abraham Lincoln, which carries up to 80 aircraft, to the Middle East.
Axios reported on Wednesday that a US military campaign would be a massive, weeks-long operation, and on a much larger scale than the operation American forces carried out in Venezuela to kidnap Nicolas Maduro in January.
