Oil prices were sharply lower on Monday following comments by President Donald Trump that diplomatic negotiations with Iran are advancing, easing market fears of severe energy supply disruptions due to the Middle East conflict. Brent crude for July delivery fell 5.9% to trade at $97.44 per barrel at 7.45 am ET in Monday’s early morning session, slipping below the $100-per-barrel mark for the first time in nearly three weeks while the corresponding WTI contract fell by a similar margin to trade at $90.99/bbl. Easing inflation and supply concerns prompted a global stock market rally, with Japan’s Nikkei reaching a record high and U.S. futures posting solid gains.
Markets reacted to tentative progress in U.S.-Iran diplomatic talks. Tracking data shows de-escalation movements, such as Chinese tankers shifting out of the high-tension zone, while earlier IEA strategic petroleum reserves are being tapped at a record clip to cushion the market.
However, both Washington and Tehran have downplayed expectations for an immediate peace agreement to end their three-month-old war, backing away from claims of an imminent breakthrough. Trump recently revealed that he has instructed negotiators not to rush the process, asserting that the U.S. naval blockade on Iranian ports will remain in full effect until a finalized accord is certified and signed. Secretary of State Marco Rubio has affirmed that Washington will exhaust diplomatic channels; however, he has warned that the U.S. will handle Iran in “another way” if a good agreement cannot be secured, hinting at a potential return to active war.
Iranian Foreign Ministry spokesperson Esmaeil Baghaei has clarified that while a 14-point framework has been reached, it does not mean they are close to a final signing. Tehran insists that current negotiations are focused strictly on ending active hostilities and lifting the U.S. economic and naval blockade, rather than broader nuclear concessions. Iran insists it will not impose traditional tolls for passage through the strategic Strait of Hormuz, but says it expects compensation for maritime security and environmental services provided.
By Alex Kimani for Oilprice.com
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