- Oil prices fell about 1% on Monday.
- Brent traded near $71, WTI near $65.75.
- Iran and U.S. to hold nuclear talks Thursday.
- Trump announced increase in temporary import tariffs.
Besides easing by roughly one percent Monday, oil prices reflected trader concerns tied to new diplomatic talks between the U.S. and Iran. Although optimism grew around negotiations, confusion emerged over shifting American trade strategies.
While markets digested the potential for peace, economic signals elsewhere turned murky. Because of mixed expectations, investors adjusted positions cautiously throughout the day. Following reports from Reuters, the dip highlighted how global politics still shape energy trends.
Brent crude dipped by 76 cents, falling 1.06% to reach $71 per barrel during morning trading across Asia; at the same time, U.S. West Texas Intermediate slipped 75 cents, down 1.10%, settling at $65.75, according to Reuters. This drop came after a solid weekly rise, both prices had climbed beyond 5% amid growing concern over worsening conflict in the Middle East.
After word came that Washington and Tehran will meet again Thursday in Geneva for another round of nuclear negotiations, mood among investors began to shift. Talks are restarting, confirmed Oman's foreign minister. A high-level figure from Iran mentioned to Reuters the possibility of offering limits on nuclear activities, should sanctions be lifted and enrichment rights acknowledged. Expectations adjusted quietly across financial circles.
Risk Premium Drops With Return of Diplomacy
A calmer outlook emerged once talks became likely, reducing fear over possible halts in Iran's oil exports. With heightened U.S. military presence noted in recent updates, experts suggest such tensions previously pushed crude costs higher due to added uncertainty.
"Brent has at least $10 per barrel Iran risk premium but as long as the threat of U.S. strikes hangs over diplomatic efforts, with a constant looming reminder from the naval armada amassed by Washington in the Middle East, it is hard to see crude sliding substantially," said Vandana Hari, founder of oil market analysis provider Vanda Insights.
Even as larger economic worries pressured market values, former President Donald Trump announced an increase in import duties. Over the weekend, he raised the rate from 10% to 15%. This shift followed a Supreme Court ruling that invalidated his earlier policy. The new level marks the highest permitted by current legislation.
"The tariff news over the weekend has resulted in some risk aversion flows this morning, which can be viewed in the price of gold and U.S. equity futures and this is weighing on the crude oil price," IG Markets analyst Tony Sycamore said.
Growth Worries Balance Supply Fears
Still adjusting to new trade barriers, markets face pressure as import taxes rise across key economies. An ongoing review by Beijing follows last week's high court decision in America regarding cross-border duties. Instead of escalating tensions, officials urge dialogue after labeling certain levies as one-sided actions. With energy usage tied closely to manufacturing trends, any slowdown risks affecting consumption patterns worldwide.
Fears over rising tensions between the U.S. and Iran pushed Brent and WTI prices up earlier in the week. Now, shifts in trade policy have softened that upward movement.
Looking ahead, investment firms are assessing future supply trends. Should tensions around Iran stay calm, Goldman Sachs anticipates an oversupply in the world oil market through 2026. Instead of earlier estimates, it now expects Brent crude to reach $60 per barrel by late 2026, with WTI at $56. This shift follows shrinking stockpiles across OECD nations, prompting a revision upward by $6 for the final quarter forecast.
Fifth-month oil forecasts might drop by $5 to $8 if deals ease penalties on Iran and Russia, according to Goldman experts. Supply could grow faster under such conditions, pushing inventories higher. That shift may weigh on prices through late 2026. Market pressure would likely follow.
Oil prices lately show just how easily they react when world events shift or policies stay unclear. Even though talks between the U.S. and Iran have lowered tensions somewhat, changes in trade rules still stir doubt about future demand. Growth worries around the globe add pressure too - these factors together steer where prices head next. Uncertainty lingers beneath surface calm.
FAQs
Why did oil prices fall amid U.S.-Iran nuclear talks?
Oil prices dropped about 1% as renewed nuclear talks between the U.S. and Iran eased fears of an escalating military conflict. Reduced geopolitical risk lowered the immediate threat of supply disruptions.
How did Trump's new tariffs impact oil markets?
President Trump's decision to raise global tariffs to 15% added uncertainty over global growth and fuel demand. Concerns that trade tensions could slow economic activity weighed on crude prices.
When is the next round of U.S.-Iran nuclear negotiations?
The third round of talks is scheduled for Thursday in Geneva. Iranian officials have indicated willingness to make nuclear concessions in exchange for sanctions relief.
What is the current price of Brent and WTI crude?
Brent crude slipped to around $71 per barrel, while U.S. West Texas Intermediate fell to about $65.75 per barrel. Both benchmarks declined roughly 1% in early trading.
Could sanctions relief for Iran affect oil supply in 2026?
Analysts say lifting sanctions on Iran could increase global oil supply and build inventories. That could create downside risks for prices later in 2026 if no major disruptions occur.
