Crude oil prices fell by more than 1% on Monday after easing geopolitical tensions in the Middle East reduced concerns about potential supply disruptions. The pullback followed confirmation from both the United States and Iran that they plan to continue indirect negotiations over Tehran’s nuclear programme.
By 07:47 GMT, Brent crude futures were down 84 cents, or 1.2%, at $67.21 a barrel, while U.S. West Texas Intermediate crude declined by 82 cents, or 1.3%, to $62.73.
“With more talks on the horizon, the immediate fear of supply disruptions in the Middle East has eased quite a bit,” said Tony Sycamore, market analyst at IG.
Officials from Washington and Tehran said discussions held on Friday in Oman were constructive and agreed to keep the dialogue going. The announcement helped calm fears that a breakdown in diplomacy could push the region closer to open conflict, particularly given the recent buildup of U.S. military assets in the area.
The Middle East remains a critical chokepoint for global energy markets, with roughly one-fifth of the world’s oil consumption passing through the Strait of Hormuz between Oman and Iran.
Both Brent and WTI ended last week more than 2% lower, marking their first weekly decline in seven weeks as geopolitical risks appeared to ease.
Still, the situation remains fragile. Iran’s foreign minister warned that the country would retaliate against U.S. bases in the Middle East if attacked, underscoring the lingering risk of escalation.
“Volatility remains elevated as conflicting rhetoric persists. Any negative headlines could quickly reignite risk premiums in oil prices this week,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Beyond Middle East tensions, investors are also watching Western efforts to curb Russia’s oil revenues, which help finance its war in Ukraine. On Friday, the European Commission proposed sweeping restrictions on services that support Russia’s seaborne crude exports.
In parallel, refiners in India—previously the largest buyers of Russian oil shipped by sea—are avoiding April deliveries and are expected to remain cautious for longer, according to industry sources. The shift could also support India’s efforts to advance trade negotiations with the United States.
“Oil markets will remain sensitive to how broadly this pivot away from Russian crude unfolds, whether India’s reduced purchases persist beyond April, and how quickly alternative flows can be brought online,” Sachdeva added.
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