Oil prices rose more than 1.5% in Asian trading on Thursday, due to growing fears of a US military attack on Iran that could disrupt supplies from the region.
Anton Pétrus | Instant | Getty Images
Oil prices fell on Monday as investors eased fears of a supply shock after US President Donald Trump’s statements on Iran signaled a possible easing of tensions between Tehran and Washington.
Trump has repeatedly warned Iran of possible intervention if it fails to reach a nuclear deal or continues to suppress domestic protests, which Tehran says are fueled by the West. On Saturday, he told reporters that Iran was “talk seriously” with the United States.
His comments come after Iran’s top security official, Ali Larijani, said on X that preparations for negotiations were underway.
Oil prices recently hit a six-month high amid fears the United States could carry out a military attack on Iran. Washington last week deployed a “massive Armada” towards Iran, a decision which raised fears of a confrontation with this Middle Eastern country.
Brent, world reference fell 6.4% to $66.15 a barrel on Monday, according to LSEG data, and was last down 4.41%. United States West Texas Intermediate Futures were down 4.75% at $62.11 a barrel.
Andy Lipow, president of Lipow Oil Associates, said the new price drop followed reports that Washington and Tehran were communicating through intermediaries, raising hopes that tensions could ease rather than escalate.
“The talks are taking place just as Iran is threatening to trigger a regional war if attacked, which could lead to a substantial rise in oil prices, an outcome the Trump administration would like to avoid,” he told CNBC.
Marko Papic, macro and geopolitical strategist at BCA Research, added that the US administration’s sensitivity to oil prices could curb further escalation. “I think President Trump is worried that if oil prices rise to between $70 and $80, he will fall further into the abyss before the midterm elections.”
The United States faces midterm elections later this year, and fuel prices are traditionally a sensitive political issue for voters.
The diplomatic pollsters also come at a time when additional supply is quietly entering the market. Venezuelan crude, much of which comes from offshore and onshore stocks rather than new production, is adding to available barrels even as global oil production continues to outpace demand.
Both experts said these flows help cap prices even as OPEC+ continues to manage production cautiously.
“As additional quantities of Venezuelan oil enter the market as offshore and onshore inventories are liquidated and sold, the oil market will also continue to be supported by OPEC+’s decision to hold current production levels stable,” Lipow said.
The oil cartel decided on Sunday to leave production levels unchanged for the month of March, extending the supply freeze by three months.
