Crude Oil Dips as Iran-US Talks in Oman Ease Pressure

By Adedapo Adesanya

Crude oil was down by almost 3 per cent on Thursday in choppy trading, after the US and Iran agreed to hold talks in Oman on Friday.

Brent crude futures depleted by $1.91 or 2.75 per cent to trade at $67.55 per barrel, and the US West Texas Intermediate (WTI) crude futures slumped by $1.85 or 2.84 per cent to $63.29 per barrel.

The US and Iran are set to hold nuclear talks in Oman today after President Donald Trump warned the country’s supreme leader should be “very worried.”

The high-stakes talks are scheduled to take place on Friday in the Omani capital, Muscat, and will involve Iranian Foreign Minister Abbas Araghchi and President Trump’s special envoy, Mr Steve Witkoff.

Tensions between the two countries have escalated sharply in recent weeks following a deadly crackdown by Iranian security forces on nationwide anti-government protesters. The crackdown prompted Trump to send a US military “armada” to the region and threaten to launch strikes.

Now, market analysts noted that the talks are being given the benefit of the doubt, but noted scepticism that any reasonable deal could be made with Iran.

The discussions come as the US builds up forces in the Middle East, and regional players seek to avoid a military confrontation that many fear could escalate into a wider war and impact the Strait of Hormuz.

About a fifth of the world’s total oil consumption passes through the Strait of Hormuz between Oman and Iran. Other OPEC members, Saudi Arabia, the United Arab Emirates, Kuwait and Iraq, export most of their crude via the strait, as does Iran.

Strength in the US Dollar and volatility in precious metals also weighed on commodities and risk sentiment more broadly on Thursday. The greenback getting stronger makes oil expensive for holders of other currencies.

On the supply side, discounts on Russian oil exports to China widened to new records this week as sellers cut prices to attract demand from the world’s top crude importer and offset the likely loss of Indian sales. This week, a trade deal was announced between the US and India, which agreed to halt purchases of Russian crude.