Global oil prices fell on Monday after diplomatic talks between the United States (US) and Iran concluded in Switzerland, easing fears of a potential supply disruption in international energy markets.
Brent crude dropped by $1.68, or 2.09%, to $78.89 per barrel, while US West Texas Intermediate (WTI) crude also declined ahead of the contract expiry. Prices had initially surged earlier in the session due to geopolitical uncertainty but reversed direction as negotiations progressed.
Market sentiment improved after reports that Iran had secured waivers for oil and petrochemical exports as part of discussions aimed at reducing tensions and stabilising regional trade flows. Analysts said the development eased concerns over immediate supply shortages and helped restore confidence in global markets.
Iranian officials also indicated that the agreement could allow a significant volume of crude exports to return to the market, potentially increasing global supply by up to 1.5 million barrels per day. This prospect contributed to downward pressure on prices as traders reassessed supply-demand dynamics.
However, uncertainty remains over the long-term stability of the agreement. Earlier in the week, tensions briefly escalated after reports of disruptions in the Strait of Hormuz, a key global shipping route, and warnings of renewed conflict. Shipping data had shown a temporary decline in vessel movement through the strategic waterway.
Despite the recent decline, oil prices had already fallen more than 8% in the previous week amid expectations of increased supply and possible easing of sanctions on Iranian crude exports. Additional output from Gulf producers, including Iraq, Kuwait and the United Arab Emirates, has also contributed to concerns about rising supply levels.
Analysts warn that while diplomatic progress has helped calm markets, risks remain if negotiations stall or geopolitical tensions re-emerge in the region. The next phase of technical talks between US and Iranian officials is expected to play a key role in determining future market direction.
For now, traders are closely watching developments from Switzerland as markets adjust to shifting expectations around supply stability and geopolitical risk in the Middle East.