Oil prices gave up much of their earlier gains on Monday and briefly moved into negative territory after reports suggested President Donald Trump may be willing to ease sanctions on Iran.
According to the reports, Washington could consider releasing frozen Iranian assets if Tehran shows meaningful progress on its nuclear program.
Oil Rally Fades After Iran Sanctions Report
Crude prices had risen sharply earlier in the session as tensions around the Strait of Hormuz remained elevated.
Iran said it would not soften its conditions for reopening the key shipping route after Trump rejected Tehran’s latest proposal.
However, sentiment shifted after reports emerged that the U.S. may be prepared to offer sanctions relief in return for progress on nuclear negotiations.
At 12:33 ET, Brent crude futures for November delivery were up 1.2% at $105.56 per barrel.
U.S. West Texas Intermediate crude futures for November gained 0.3% to $92.67 per barrel.
Iran Maintains Conditions for Reopening Hormuz
Iran’s proposal would allow the Strait of Hormuz to reopen within seven days while broader negotiations resume.
However, Tehran is demanding several concessions from Washington.
These include ending the U.S. naval blockade, reducing military pressure, lifting sanctions on Iranian oil exports and agreeing to a ceasefire.
Iran has said it remains committed to those terms despite Trump’s rejection.
U.S.-Iran Talks Could Resume This Week
Despite the disagreement, Trump has said he expects negotiations with Iran to resume this week.
Qatar has been acting as an intermediary between Washington and Tehran in an effort to revive diplomatic talks.
Any progress toward an agreement could have major implications for oil markets, particularly if it leads to increased Iranian exports or a full reopening of the Strait of Hormuz.
Strait of Hormuz Remains Critical for Global Oil Supply
The Strait of Hormuz remains one of the world’s most important energy shipping routes.
Before the conflict began, around one-fifth of global oil and liquefied natural gas supplies passed through the waterway.
Shipping activity has fallen sharply since tensions escalated, creating uncertainty around global energy supplies.
The disruption has also forced Gulf oil producers to explore alternative routes for moving crude to international markets.
Houthi Attacks Add to Supply Risks
Geopolitical risks have also increased elsewhere in the region.
Iran-backed Houthi forces in Yemen have intensified attacks targeting Saudi Arabia and commercial shipping in the Red Sea.
Saudi Arabia said it intercepted two ballistic missiles and two drones on Saturday.
The incident came only days after Saudi forces intercepted six missiles aimed toward Taif and the Yanbu region.
These developments have added another layer of uncertainty to energy markets.
More Oil Begins Moving Through Hormuz
Despite ongoing tensions, there have been signs that crude shipments through the Strait of Hormuz are beginning to increase.
Trump said more than 20 million barrels of oil passed through the strait over the weekend.
An increase in traffic could help ease some supply concerns, although markets remain sensitive to any new military or diplomatic developments.
Diesel Prices Remain Under Pressure
Energy traders are also closely watching refined fuel markets.
Diesel prices in Europe and the United States recently reached record highs as disruptions to oil and fuel exports from the Middle East and Russia tightened global supply.
That has increased concerns about inflation and transportation costs across major economies.
Oil Market Focus Turns to Iran Negotiations
Oil prices are likely to remain volatile as investors monitor talks between the United States and Iran.
Any agreement involving sanctions relief, higher Iranian oil exports or the reopening of the Strait of Hormuz could put downward pressure on crude prices.
However, continued military tensions or further disruption to shipping routes could keep supply risks elevated.
For now, the oil market remains caught between diplomatic hopes and ongoing geopolitical uncertainty.
