Oil prices swing on US-Iran talks and expectations for Strait of Hormuz reopening

Brent crude futures were down despite Donald Trump’s renewed threats to ‘take over’ Iran unless it opens the Strait of Hormuz

Oil prices declined on Monday after US-Iran talks concluded in Switzerland with Tehran saying it had secured waivers for oil and petrochemical exports, easing worries about a supply shortage in global markets. Brent crude fell $1.68, or 2.09 per cent, to $78.89 a barrel by 0633 GMT (11:33am PKT). Prices had climbed to $82.30 at the start of trading, fuelled by a bumpy start to the talks with threats from US President Donald Trump to restart the war on Iran and Tehran’s announcement it had again closed the Strait of Hormuz. US West Texas Intermediate crude futures were at $76 a barrel, down 60 cents, ahead of the contract’s expiry later on Monday. The more active August contract fell 69 cents to $75.16 a barrel. There was no settlement in the US market on Friday due to a holiday. “The decline has been driven primarily by improving prospects for a diplomatic breakthrough between the United States and Iran … reviving hopes that sanctions on Iran could eventually be eased,” said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm. High-ranking US and Iranian officials wrapped up their first round of talks in Switzerland on Monday, mediators said. The talks began on Sunday under the terms of a memorandum of understanding reached last week to extend a tenuous ceasefire from April for at least another 60 days. Iranian Foreign Minister Abbas Araghchi said his country had secured waivers for oil and petrochemical exports, the release of some frozen assets and the launch of a reconstruction and development plan for Iran. “Such a development would allow nearly 1.5 million barrels per day of Iranian crude to return to international markets, significantly improving global supply availability at a time when demand growth remains moderate,” Sachdeva said. ‘Very real risks’ Before the talks, the number of ships that passed the Strait of Hormuz fell sharply on Sunday, shipping data showed, after Iran announced it had again closed the waterway, citing Israeli and US violations of the interim peace deal. Israeli strikes in Lebanon killed at least 20 people on Saturday, Lebanon’s state news agency NNA said, one day after a ceasefire with Hezbollah took effect, aimed at halting months of escalating violence. “Recent developments show that moving towards a more permanent deal will be challenging, with very real risks of a flare-up in hostilities during the 60-day ceasefire,” ING analysts said in a note ahead of the announcement of the conclusion of the talks in Switzerland. Still, oil prices fell more than 8pc last week on hopes of more supply from the release of cargoes stranded in the Gulf and the potential lifting of US sanctions on Iranian oil as part of the US-Iran deal. Over 25m barrels of Iranian oil have passed through the virtual blockade line since Monday, the head of the National Iranian Oil Company, Hamid Bovard, told state TV on Sunday. The United Arab Emirates, Kuwait and Iraq have offered more oil to customers in the past week. Iraq plans to restore crude production gradually to between 4.2m and 4.3m barrels per day, Iraq’s deputy oil minister for upstream affairs said in a statement on Sunday.

Oil prices retreated on Monday after signs of progress in US-Iran negotiations eased fears of ongoing supply disruptions in the Strait of Hormuz, a critical global oil transit route.

Crude oil prices moved lower on Monday as the United States and Iran started formal negotiations aimed at reaching a long-term peace agreement.The global benchmark Brent crude fell around 1.91 percent to trade near the $79 per barrel mark. US benchmark West Texas Intermediate (WTI) crude also declined 0.70 percent to $75.32 per barrel during Asian trading hours.The decline in oil prices came as the United States and Iran launched a 60-day negotiation process in Switzerland.The talks are being led by US Vice President JD Vance and Iran’s Parliament Speaker Mohammad Bagher Ghalibaf along with Foreign Minister Abbas Araghchi. Pakistan and Qatar are acting as mediators in the discussions. Sensex Climbs 473 Points, Nifty Gains 0.6%, Banking And IT Stocks Lead Market ReboundThe negotiations had briefly faced uncertainty last week after Vance delayed his Switzerland visit. Iran had reportedly shown reluctance to continue talks because of Israel’s ongoing military operations in Lebanon.Oil prices had already softened last week after Washington and Tehran signed a peace memorandum. However, prices recovered towards the end of the week as renewed Israeli strikes in Lebanon raised concerns about the durability of the agreement.One of the key outcomes of the memorandum was the reopening of the Strait of Hormuz, one of the world's most important energy shipping routes. The waterway handles nearly 20 percent of global oil supplies transported from the Gulf region.Under the agreement, Iran has committed to ensuring the safe movement of commercial vessels through the strait without imposing additional charges.Iran Suspends Quadrilateral Talks With US, Qatar And Pakistan Following President Donald Trump's Threats | VideoThe memorandum also outlines a framework aimed at ending hostilities across several regional fronts, including Lebanon.However, Israel has continued military operations against Hezbollah in Lebanon, keeping geopolitical risks elevated.Market participants remain cautious as any fresh escalation in West Asia could once again disrupt energy supplies and affect oil prices.The agreement gives both countries 60 days to negotiate a final peace settlement, with an option to extend the talks if necessary.

US President Donald Trump threatened military action against Iran if Hezbollah resumes attacks on Israel, injecting fresh uncertainty into peace negotiations that had raised hopes of easing tensions in the Middle East. Brent crude climbed as much as 2.2% to above $82 a barrel, while West Texas Intermediate traded above $78.

As the price of crude oil falls governments are counting the costs of the war in the Middle East Hailing his Iran deal this week amid the excess of Versailles, Donald Trump urged sceptics to take Wall Street’s word for its success. “There is nothing as smart as the market – and the market loves it,” he said, claiming credit for ending the economic chaos that had kicked off when he started bombing Iran in late February. Without the agreement, he said, “the alternative would be a worldwide depression”.By the weekend, the outlook was less optimistic after planned US-Iran peace talks in Switzerland were abruptly called off, then reinstated, and Iran said Israeli bombing in Jordan meant it was justified in closing the strait of Hormuz again. Still, hopes persist that the sea passage carrying about 20% of the world’s oil supplies will reopen fully in the coming days and weeks. Continue reading...