Oil Prices Drop as US-Iran Peace Talks Show Signs of Progress
By Aboki Forex —
Oil prices fell on Monday after the United States and Iran showed signs of progress in peace talks. Brent crude slipped to around $79 a barrel, reversing an earlier gain of as much as 2.2%. West Texas Intermediate was near $75.
The parties have agreed on a roadmap toward a final deal in 60 days. Technical talks will continue for the rest of the week, according to a statement from Qatar and Pakistan, who are mediating the discussions in Switzerland.
The high-level meeting followed a memorandum of understanding signed last week. That deal was tested over the weekend after Iran claimed to have closed the Strait of Hormuz, accusing Israel of violating a ceasefire in Lebanon.
Iranian Foreign Minister Abbas Araghchi said on X that mediation in Switzerland delivered major progress to end the conflict in Lebanon. Negotiations got off to a shaky start when Iranian media reported the Islamic Republic halted discussions after US President Donald Trump issued a fresh threat. But people familiar with the matter said talks continued into the early hours of Monday in Switzerland.
Discussions covered topics including how to keep the Strait of Hormuz open and how to enforce the ceasefire between Israel and Hezbollah in southern Lebanon, according to a senior US diplomat involved in the talks.
The war in the Middle East has choked off supply in a region that produces a third of the world's oil. Crude futures have come off in recent weeks, although prices remain higher than before the war. Global refiners found temporary workarounds, and the prospect of an end to the conflict fueled optimism over a rapid return to normality.
Despite Iran claiming to have closed the Strait of Hormuz again, millions of barrels of oil continued to flow through the waterway over the weekend. Still, Chubb Ltd. CEO Evan Greenberg told Fox News that security remains volatile despite US efforts to open shipping channels.
“We believe markets remain overly optimistic over the sustained resumption of oil flows from the Middle East,” said Vivek Dhar, an analyst with Commonwealth Bank of Australia. He added that uncertainties over production and whether vessels are willing to return to the region will hamper flows.
A peace deal would in theory unleash a gush of supply where there is less demand for now, especially given a slump in purchases.