Oil slid in a choppy session as traders parsed mixed signals on the risks of supply disruptions in the Middle East.
West Texas Intermediate edged down to settle near $64 a barrel, snapping a two-day winning streak, amid competing headlines on the status of diplomatic negotiations between the US and Iran. Prices dropped after Oman’s Foreign Minister Badr Albusaidi said that discussions during last week’s Iran-US talks were productive. Minutes later, futures pared some losses on an Axios report that US President Donald Trump might send a second aircraft carrier to the Middle East if negotiations on Iran’s nuclear program and other issues fail.
The episode underscores the whiplash investors face. Many are looking ahead to a Wednesday meeting between Trump and Benjamin Netanyahu for clarity, amid widespread expectations that Israel’s prime minister will urge a tougher US stance on Tehran’s ballistic missile program.
“I will present to the president our views regarding the principles of the negotiation,” Netanyahu said of the upcoming discussion.
In the absence of clear signals on the direction of the Middle East conflict, oil prices took cues from weaker equities.
Crude has risen more than 10% this year as recurrent geopolitical flare-ups eclipsed concerns that a global surplus would lift inventories and hurt prices.
The US said on Monday that American-flagged vessels should stay as far as possible from Iranian waters when passing through the Strait of Hormuz. Washington has amassed a powerful military force in the Middle East, even as it also pursues talks with Tehran over its nuclear ambitions.
The Strait of Hormuz is a critical trade artery for Middle East energy shipments that links a slew of producers to global markets, especially in Asia. Tehran has threatened to close the maritime chokepoint during periods of geopolitical tension, though it hasn’t actually followed through.
“Both Washington and Tehran seem to have put a positive spin on the Oman talks, signaling that further discussions will likely be held,” RBC Capital Markets LLC analysts including Helima Croft said in a note.
During a recent visit to the Gulf, “well-placed regional observers suggested that the fear of higher oil prices could ultimately push” Trump to seek a settlement, the RBC analysts added.
In another support to prices, assessments by eastern NATO member states Poland and Estonia reveal that Russia has no intention of ending its war in Ukraine. The report warns that President Vladimir Putin is likely using peace talks to buy time and restore full relations with Washington, a path that would open the possibility of sanctions relief.
Prices:
WTI for March delivery was down 0.6% to settle at $63.96 a barrel in New York.
Brent for April settlement edged lower 0.4%% to settle at $68.80 a barrel.
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