Oil prices fell sharply on Thursday, sliding more than 3% after the United States and Iran agreed to hold talks in Oman on Friday, easing fears of potential disruptions to Iranian crude supplies.
By 11:12 a.m. EDT (16:12 GMT), Brent crude futures were down $2.33, or 3.35%, at $67.13 a barrel, while U.S. West Texas Intermediate crude dropped $2.23, or 3.42%, to $62.91.
Markets remain highly sensitive to geopolitical developments in the Middle East, with traders closely monitoring the planned talks in Oman, said Giovanni Staunovo, an analyst at UBS. The discussions come as the United States builds up its military presence in the region, while regional powers seek to avoid a confrontation that could escalate into a broader conflict.
Analysts at Aegis Hedging noted that uncertainty persists due to differing expectations over the scope and objectives of the negotiations. They said this divergence is fueling volatility in crude markets as traders weigh the risks of escalation against the prospects for diplomacy.
Roughly one-fifth of the world’s oil consumption passes through the Strait of Hormuz, which lies between Oman and Iran. Major OPEC producers, including Saudi Arabia, the United Arab Emirates, Kuwait and Iraq, ship most of their crude through the strait, alongside Iranian exports, underscoring the region’s strategic importance.
Heightened volatility has prompted investors to lock in prices, with a record volume of WTI Midland contracts traded in Houston in January. The surge reflects ongoing concerns about Middle Eastern supply risks, as well as increased flows of Venezuelan crude into the U.S. Gulf Coast.
A stronger U.S. dollar and sharp swings in precious metals also weighed on commodities and broader risk sentiment on Thursday, according to analysts.
On the supply front, discounts on Russian crude exports to China widened to record levels this week, as sellers slashed prices to attract demand from the world’s largest oil importer and offset the expected loss of Indian buyers. The move follows a trade agreement announced earlier this week in which India agreed to halt purchases of Russian oil.
Meanwhile, Argentina’s energy trade surplus is expected to rise further in 2026 after reaching a record last year, driven by higher crude output from the Vaca Muerta shale formation. Three analysts told Reuters the surplus could reach between $8.5 billion and $10 billion.
