Oil slides as Trump signals Iran talks, easing supply shock fears
In Asian trade, oil prices rose more than 1.5 percent on Thursday as concerns grew that a U.S. military strike on Iran could disrupt supplies from the region.
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Oil prices fell on Monday as investors dialed back fears of a supply shock after US President Donald Trump’s comments on Iran signaled an ease in tensions between Tehran and Washington.
Trump has repeatedly warned of possible intervention if Iran fails to reach a nuclear deal or continues to suppress internal protests that Tehran claims are fueled by the West. He told reporters on Saturday that Iran was. “We are in serious talks” with the USA.
His comments came after Iran’s top security official, Ali Larijani, said on channel X that preparations for negotiations were ongoing.
Oil prices rose to the highest level in the last six months on fears that the United States might launch a military attack on Iran. Washington deployed a “massive Armada” against Iran last week, raising fears of a conflict with the Middle Eastern country.
LSEG data showed global benchmark Brent fell as much as 6.4% to $66.15 per barrel on Monday and was last seen 4.41% lower. US West Texas Intermediate futures were down 4.75% at $62.11 per barrel.
Andy Lipow, president of Lipow Oil Associates, said the renewed decline in prices followed reports that Washington and Tehran were communicating through intermediaries, raising hopes that tensions would ease rather than spiral.
“The talks are taking place at a time when Iran is threatening a regional war if attacked, which could lead to significantly higher oil prices, an outcome the Trump Administration wants to avoid,” he told CNBC.
BCA Research macro and geopolitical strategist Marko Papic added that the US administration’s sensitivity to oil prices could act as a brake on the further rise. “I think President Trump is concerned that if oil prices rise to $70-$80, he’s going to be in even worse shape before the midterms.”
The United States faces midterm elections later this year, and fuel prices have traditionally been a sensitive political issue for voters.
Diplomatic perceptions also come at a time when additional supply is quietly entering the market. As global oil production continues to exceed demand, Venezuelan crude, much of it from offshore and onshore stockpiles rather than new production, is increasing the number of barrels available.
Both experts said these flows are helping price caps even as OPEC+ continues to carefully manage production.
“As additional amounts of Venezuelan oil come to the market as offshore and onshore stocks are liquidated and sold, the oil market will continue to be supported by OPEC+’s decision to keep current production levels constant,” Lipow said.
The oil cartel decided on Sunday to keep production levels unchanged for March, extending a freeze on supplies for three months.
