Oil prices were largely steady on Monday following sharp losses last week, as the United States and Iran signalled that negotiations over Tehran’s nuclear programme will continue. The renewed diplomatic engagement helped ease fears of escalating tensions in the Middle East.
By 08:35 ET (13:35 GMT), Brent crude futures for April slipped 0.3% to $67.82 per barrel, while U.S. West Texas Intermediate crude eased 0.4% to $63.31 per barrel.
Both benchmarks recorded their first weekly decline in seven weeks last week, with Brent down more than 3% and WTI falling over 2%. The pullback came as geopolitical tensions involving Iran cooled and broader financial markets sold off, led by equities.
U.S. and Iran signal progress in nuclear talks
Over the weekend, Washington and Tehran confirmed that indirect nuclear talks will continue following what both sides described as constructive discussions held in Oman on Friday. The announcement reduced immediate concerns that a military conflict in the Middle East was imminent, particularly after the U.S. had earlier deployed additional warships to the region.
Heightened tensions in recent weeks had pushed traders to build a larger risk premium into oil prices, especially after President Donald Trump threatened possible military action against Iran. However, the likelihood of a full-scale regional conflict now appears lower, even as Tehran reiterated that it will continue its nuclear enrichment activities.
Analysts at ING said uncertainty remains high, suggesting oil markets are likely to continue pricing in some level of geopolitical risk. They also noted that while talks were reportedly constructive, the U.S. imposed fresh sanctions on Iranian oil exports on Friday.
U.S. and China data in focus
Investors are also turning their attention to key economic data releases from the world’s largest oil consumers. In the United States, January nonfarm payrolls figures are due on Wednesday, followed by the consumer price index report on Friday.
These releases are expected to provide further insight into the outlook for interest rates, as markets continue to assess future monetary policy under nominated Federal Reserve chair Kevin Warsh.
In China, January CPI data is scheduled for release on Friday, offering fresh signals on economic conditions in the world’s largest crude oil importer. The data comes just ahead of the Lunar New Year holiday, a period typically associated with increased travel and fuel demand.
Adding to the busy week, the U.S. Energy Information Administration will publish its Short-Term Energy Outlook on Tuesday. This will be followed by OPEC’s monthly oil market report on Wednesday and the International Energy Agency’s monthly assessment on Thursday.
