Oil edges lower as US-Iran talks resume

Oil prices slipped from their strongest close since July as diplomatic talks between the US and Iran are set to resume this week, even as American military forces remain heavily deployed in the Middle East.

Brent crude traded below $72 a barrel after surging nearly 6% last week, News.Az reports, citing Bloomberg.

The rally followed comments by Donald Trump that he was considering a limited military strike on Iran. A new round of negotiations is scheduled to take place in Geneva on Thursday.

Iranian Foreign Minister Abbas Araghchi told CBS on Sunday that he sees a “good chance” of reaching a diplomatic solution regarding Iran’s nuclear program, while reiterating that Tehran will not yield to pressure from the US military buildup in the region.

Fears of a broader Middle East conflict, along with several supply disruptions, have pushed crude prices higher despite widespread expectations of a global supply surplus. A potential escalation could threaten shipments through the Strait of Hormuz — a critical chokepoint for exports from the world’s largest oil-producing region.

The narrow waterway separates Iran from the Arabian Peninsula and serves as a vital transit route for tankers carrying crude oil and liquefied natural gas from Persian Gulf producers to global markets. Even limited disruption, rather than a full blockade, could significantly impact oil flows.

Major exporters including Saudi Arabia, Iraq and Kuwait ship much of their oil through Hormuz, with the majority bound for Asia. Iran itself produces more than 3 million barrels per day, with most of its exports heading to China.

Market volatility has begun affecting freight rates. Charter costs for supertankers traveling from the Middle East to China climbed above $150,000 per day last week.

Meanwhile, bullish activity in oil options markets has increased as traders seek protection against a potential price spike.

Separately, Goldman Sachs Group raised its oil price forecasts, citing smaller-than-expected inventory builds in developed economies. The bank still projects Brent to fall to $60 per barrel by year-end, but acknowledged that sanctions and supply disruptions are keeping prices elevated in the near term.

News.Az 

By Nijat Babayev