Oil Prices Retreat as U.S.-Iran Talks Confirmed for Friday in Oman
(Bloomberg) -- Oil prices snapped a three-day rally on Thursday after Tehran confirmed plans for direct negotiations with Washington, temporarily reducing the geopolitical risk premium that has buoyed markets.
Brent crude futures declined toward $68 per barrel, paring back a 4.8% gain from the previous two sessions. West Texas Intermediate traded below $64. The pullback followed a social media statement from Iranian Foreign Minister Abbas Araghchi, who verified that discussions would take place in Oman on Friday—marking the first publicly acknowledged bilateral meeting in months.
"The confirmation of talks has provided a pressure valve for a market that was pricing in worst-case scenarios," said Warren Patterson, head of commodities strategy at ING Groep NV in Singapore. "But the underlying structural tensions haven't disappeared. We're seeing a classic 'buy the rumor, sell the fact' dynamic, with traders questioning whether diplomacy can truly overcome years of deadlock."
The region at the heart of the tensions accounts for nearly a third of global crude supply, amplifying the market impact of any diplomatic breakthroughs—or breakdowns. Analysts note that fundamental disagreements over sanctions relief, nuclear inspections, and regional security make a comprehensive deal unlikely in the short term. However, even a commitment to continued dialogue could stabilize shipping lanes and ease insurance costs that have spiked in recent weeks.
Market attention also remains divided. Traders are monitoring Ukraine peace efforts, where President Volodymyr Zelenskiy has linked progress to Russia's targeting of energy infrastructure. Concurrently, a sharp selloff in precious metals—with silver plunging over 16%—highlighted broader commodity volatility. U.S. crude inventories, while falling to a one-month low per EIA data, provided less support than anticipated.
Market Voices:
"Finally, a step back from the brink," said Michael Chen, a portfolio manager at Horizon Capital in London. "This is precisely what the market needed—a signal that both sides remember the economic costs of confrontation. I'd expect prices to stabilize in the $65–$70 range unless talks collapse outright."
"This is theater, not diplomacy," countered Sarah Al-Mansoori, a Dubai-based energy analyst and former OPEC advisor. "We've seen this cycle before: tensions spike, prices rally, then a 'talk' is announced to cool markets. Nothing has changed on the ground. The risk premium should stay firmly in place until we see verifiable de-escalation."
"The inventory draw was underwhelming, and metals are getting hammered. This feels like a broader risk-off move, not just an oil story," noted David Park, an independent trader in New York.
"They're talking? Good. Now maybe my shipping insurance costs won't bankrupt me," said Elena Rostova, a Greek tanker charter manager, reflecting the relief among physical market participants.
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