Oil prices declined on Wednesday following remarks by Oman’s foreign minister that the U.S. and Iran would resume nuclear negotiations later this week.
Earlier in the day, crude had seen gains after a CNN report suggested that U.S. intelligence believes Israel may be preparing to target Iranian nuclear sites. The report, citing multiple American officials, noted that it remains uncertain whether Israel has made a definitive decision.
Brent crude closed 47 cents lower, or down 0.7%, at $64.91 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped 46 cents, also 0.7%, to settle at $61.57.
Iran, the third-largest oil producer within OPEC, could see its oil exports disrupted by an Israeli military strike.
“We’re heading into another round of peace negotiations, which erased the risk premium priced in earlier,” said Phil Flynn, a senior analyst at Price Futures Group.
However, tensions persist, with fears that Iran might retaliate by obstructing oil shipments through the Strait of Hormuz—a key chokepoint for crude exports from Saudi Arabia, Kuwait, Iraq, and the UAE.
“In the event of escalation, we could see temporary trade dislocations or a supply shortfall of around 500,000 barrels per day, which OPEC+ could likely offset without much delay,” noted Rystad Energy analyst Priya Walia.
Throughout this year, the U.S. and Iran have conducted multiple negotiation rounds over Tehran’s nuclear activities, while President Donald Trump has intensified sanctions targeting Iranian oil exports.
Separately, Kazakhstan increased its oil output by 2% in May, an industry insider reported Tuesday, in defiance of OPEC+ efforts to curb production.
Further downward pressure came from unexpected builds in U.S. oil stockpiles. Government data released Wednesday showed that inventories of crude oil, gasoline, and distillates all rose unexpectedly last week.
According to the Energy Information Administration (EIA), crude stocks increased by 1.3 million barrels, gasoline by 800,000 barrels, and distillates by 600,000 barrels.
