Oil prices slid on Monday after high-level talks between the United States and Iran concluded in Switzerland, with Tehran announcing it had secured waivers for oil and petrochemical exports. The development eased fears of a supply shortage, sending Brent crude down $1.53, or 1.90%, to $79.04 a barrel. The decline reversed earlier gains driven by a tense start to negotiations.
Brent had climbed to $82.30 at the opening bell, buoyed by threats from U.S. President Donald Trump to resume hostilities and Iran’s brief closure of the Strait of Hormuz, a critical waterway for global oil shipments. However, by mid-session, prices retreated after mediators confirmed the conclusion of talks under a memorandum of understanding that extends a fragile ceasefire for at least 60 days.
Iranian Foreign Minister Abbas Araqchi stated that the country had secured waivers for oil and petrochemical exports, along with the release of some frozen assets and a reconstruction plan. ‘High-level talks between the US and Iran appear to have produced some progress, with both sides agreeing to establish a high-level committee,’ noted Tony Sycamore, an analyst at IG market. ‘However, whether these steps will deliver meaningful results on the ground remains to be seen, particularly in Southern Lebanon.’
Despite the diplomatic progress, analysts at ING warned of ‘very real risks of a flare-up in hostilities during the 60-day ceasefire.’ The region remains tense, with Israeli strikes in Lebanon killing at least 20 people on Saturday, according to Lebanon’s state news agency. The violence threatens to undermine the ceasefire, which also involves Hezbollah.
Oil prices had already fallen more than 8% last week on hopes of increased supply following the release of cargoes stranded in the Gulf and the potential lifting of U.S. sanctions on Iranian oil. Over 25 million barrels of Iranian oil have passed through the virtual blockade since Monday, according to National Iranian Oil Company head Hamid Bovard. Meanwhile, the United Arab Emirates, Kuwait, and Iraq have offered additional crude to customers, with Iraq planning to restore production to 4.2-4.3 million barrels per day.
The easing of supply concerns suggests that markets are cautiously optimistic about the ceasefire’s potential to stabilize oil flows, though the situation remains fluid. Analysts emphasize that the next 60 days will be critical in determining whether the truce can hold and lead to a more permanent agreement.
Source: ARY News