Oil prices declined on Tuesday for a second consecutive session, as traders assessed the possibility of easing tensions between the United States and Iran. At the same time, a stronger U.S. dollar added further downward pressure on crude markets.
Brent crude futures slipped by 34 cents, or 0.5%, to $65.96 per barrel by 06:23 GMT. U.S. West Texas Intermediate (WTI) crude fell 32 cents, also down 0.5%, to $61.81 per barrel.
The latest losses followed a sharp drop of more than 4% on Monday, after U.S. President Donald Trump said Iran was “seriously talking” with Washington. His comments were interpreted by markets as a signal that geopolitical tensions with the OPEC member could be cooling.
Officials from both countries said nuclear negotiations are expected to resume on Friday in Turkey. However, Trump warned that failure to reach an agreement could have serious consequences, noting that major U.S. warships were moving toward Iran.
Iranian President Masoud Pezeshkian said on Tuesday that discussions with the United States could move forward if Iran’s national interests are protected and if threats and unrealistic demands are avoided.
According to OANDA senior market analyst Kelvin Wong, recent oil price volatility has largely been driven by geopolitical risk premiums linked to the current U.S. administration’s foreign policy approach, particularly its fluctuating stance toward Iran.
Additional pressure came from the U.S. dollar, which hovered near its highest level in more than a week. A firmer dollar typically weakens demand for oil, as crude is priced in U.S. currency.
ING analysts also pointed to the dollar’s recent strength following President Trump’s nomination of Kevin Warsh as the next Federal Reserve chair, saying the move contributed to lower oil prices.
On the trade front, Trump announced a new agreement with India that would reduce U.S. tariffs on Indian goods to 18% from 50%. In return, India agreed to halt purchases of Russian oil and ease trade barriers.
ING analysts warned that such a shift could increase the volume of unsold Russian oil remaining at sea. Trump said the agreement followed a call with Indian Prime Minister Narendra Modi, adding that India would instead buy oil from the U.S. and possibly Venezuela.
Looking ahead, analysts expect continued volatility in the oil market. Phillip Nova senior market analyst Priyanka Sachdeva said prices are likely to remain choppy and range-bound, reacting more to headlines and macroeconomic signals than forming a clear trend, with risks tilted to the downside.
