Oil prices fell as promises to continue US-Iran talks eased fears of supply disruptions
Oil prices dropped 1% on Monday after the US and Iran pledged over the weekend to continue talks on Tehran’s nuclear program, easing fears of conflict in the Middle East and calming investors worried about supply disruptions.
However, Iran threatened US bases if attacked, despite ongoing talks.
Brent crude futures fell 67 cents, or 1%, to $67.38 a barrel as of 04:44 GMT on Monday, while WTI crude traded down 61 cents, or 1%, at $62.94 a barrel.
Iran and the US agreed on Friday to continue nuclear talks despite differences, following what both sides described as positive talks in Oman. This eased concerns that the Middle East could slide further towards war.
Investors are also concerned about potential supply disruptions from Iran and other regional producers, as exports, which account for roughly a fifth of the world's total oil consumption, pass through the Strait of Hormuz between Oman and Iran.
Both indicators fell by more than 2% last week as tensions eased, marking their first decline in seven weeks.
Volatility remains high amid ongoing conflicting rhetoric. Any negative news could quickly reignite risk premiums on oil prices this week.
Investors are also grappling with efforts to restrict revenue from Russian oil exports. On Friday, the European Commission proposed a comprehensive ban on all services supporting Russian seaborne crude oil exports.
Refineries in India, once the largest buyer of Russian seaborne crude oil, are avoiding purchases for April deliveries, which could help India reach a trade agreement with the US.
Oil markets will remain sensitive to how widespread the shift away from Russian crude oil becomes, whether India's reduced purchases will continue beyond April, and how quickly alternative flows can be activated.
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