Crude oil fell from a six-month high on Monday after Oman announced it would continue a third round of talks with Washington and the Iranian government in Geneva this week.
Tensions have continued across the Middle East for weeks after US President Donald Trump suggested an attack on Iran could be imminent.
Since then, calm has returned to oil markets after reports on Friday said the attacks would be limited to military and government facilities, reducing the risk of prolonging the conflict between the two countries and Iranian retaliation against US military bases in the region.
“The geopolitical atmosphere has softened a little bit, at least today, and I think that’s reflected in the decline in prices,” Edward Bell, acting chief economist at Emirates NBD, told CNBC’s Dan Murphy on Monday.
Iran-related supply concerns have raised risk premiums, pushing Brent crude prices to a six-month high of $71 last week, with about $6 of that risk baked into oil prices, according to Goldman Sachs.
Oil retreat due to announcement of talks between Iran and US
The third round of indirect talks between the US and Iran is expected to continue on Thursday between Iranian Foreign Minister Abbas Araghchi and US Special Envoy for the Middle East Steve Witkoff in Geneva. The talks will be mediated by Oman’s Foreign Minister Badr Al Busaidi.
The Trump administration has been seeking concessions on Iran’s nuclear program since talks resumed in Oman earlier this month. Relations have been at an impasse since President Trump withdrew the United States from the JCPOA in 2018. The United States maintains that Iran cannot have nuclear weapons or enrich uranium, while Iran has long maintained that its nuclear program is solely for civilian purposes.
Iran’s Araghchi has appeared on US networks several times in recent days to convey Iran’s position. He appeared on MS Now’s Morning Joe program for more than 20 minutes on Friday. Over the weekend, Araghchi told CBS News that Iran is “still working on” the proposal it will submit to Witkoff, but is “ready to discuss and negotiate the draft” at a meeting in Geneva on Thursday, adding that there remains “ample opportunity” for a diplomatic solution to the nuclear issue.
Iranian President Masoud Pezeshkian said on Sunday X that his country is “committed to peace and stability in the region.”
“Recent negotiations resulted in an exchange of realistic proposals and encouraging signals,” he added. “However, we continue to closely monitor U.S. actions and are making all necessary preparations for all potential scenarios.”
growing anxiety
Student protests broke out across Tehran for the second day in a row. Protests erupted across Iran last month, with students clashing with pro-regime demonstrators and mourning the lives lost in the brutal crackdown. At least 7,015 people have been killed in protests and crackdowns so far, the U.S.-based Human Rights Defenders News Agency said, with the country’s top leader blaming the United States and President Trump.
Since then, the United States has built its largest military presence in the region, sending Carrier Strike Group 2 to the Middle East to join the aircraft carrier USS Abraham Lincoln, currently located just 250 miles off the coast of Oman in the Arabian Sea.
Although U.S. assets in the region are directed toward Iran, “it’s impossible to know what Trump in particular is going to do,” Tina Fordham, founder of Fordham Global Foresight, told CNBC’s Ian King on Monday.
“We still have a few days until Thursday. It’s not yet clear what level of commitment each side wants to make to reach a deal, and as I’ve heard from both Iranian and U.S. officials, there remains a significant gap between the two countries on the key points they’re discussing,” Bell told CNBC.
Supreme Court setback
President Trump’s ambitions in Iran may have been derailed by a recent Supreme Court ruling that found many of his sweeping tariffs announced last year illegal, casting new uncertainty on his signature economic policy.
When it comes to Iran, what President Trump ultimately decides could swing either way, analysts told CNBC on Monday.
“There are many paths that Mr. Trump could pursue, but the fact that he received this blow from the Supreme Court suggests that he will not be able to pursue this path seamlessly,” Fordham added.
According to the U.S. Constitution, Congress has the sole authority to send U.S. troops to war, except for limited attacks for national security reasons. Both Republicans and Democrats have warned that the president needs to get approval from Congress before taking any potential action against Iran.
