Oil fell for a third straight day as investors weighed the odds of diplomacy between Washington and Tehran to secure a nuclear deal and stave off a US military strike on Iran.
West Texas Intermediate fell 1% to settle below $66 a barrel, while Brent closed under $71, as an NPR report saying Iran is ready to reach a deal with the US as soon as possible circulated on social media. The market is sensitive to headlines tied to the Middle East conflict, though traders were skeptical that Iran is prepared to come to the table.
The losses were capped as signs emerged that tensions were far from abating. The US deployed 12 stealth F-22 fighter jets to Israel on Tuesday, a defense official told CNN, adding to a massive build-up of US military assets in the region. Earlier in the day, Trump said in a social media post that no deal would be “very bad” for Iran, and pushed back on reports that the Pentagon was worried an extended military campaign could prove difficult.
One option for retaliation by OPEC-member Iran would be to try to block or effectively close the Strait of Hormuz, which handles about a quarter of the world’s seaborne oil trade. The waterway is also crucial for the liquefied natural gas market.
Negotiations on a nuclear deal are set to resume on Thursday in Geneva, with Trump’s special envoy Steve Witkoff and son-in-law Jared Kushner expected to meet again with Iranian Foreign Minister Abbas Araghchi.
Concerns about the fallout from a US strike on Iran have helped drive oil higher this year, despite expectations of a global glut. American military forces have amassed in the Middle East, and the State Department on Monday ordered the evacuation of non-emergency personnel at its embassy in Beirut. The Polymarket prediction markets site sees a roughly 60% chance of the US striking Iran before the end of March.
“Near term, prices will likely be strongly influenced by the tensions in the Middle East,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “Historically, the geopolitical risk premium on crude prices has tended to fade if there were no supply disruptions per barrel to prices.”
The rise in geopolitical tensions, alongside supply disruptions at the start of the year, have allayed concerns heading into 2026 that prices would be dogged by a massive oversupply. Fears about that glut are fading amid resilient demand, US driller Diamondback Energy Inc. said this week.
Rates for oil supertankers have climbed on the risk of closure in Hormuz and a huge bet by a Korean shipowner to take control of a swath of crude carriers. Day rates to transport Saudi Arabian oil to China, a benchmark route, climbed to $196,383 on Tuesday, taking the gain this month to about 60%, according to prices from the Baltic Exchange in London.
Oil Prices
WTI for April delivery was 1% lower to settle at $65.63 a barrel in New York.
Brent for April settlement fell 1% to settle at $70.77 a barrel.
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