International crude oil prices fell in early Asian trading on Monday (January 5) as the United States and Iran pledged to continue negotiations on the nuclear program of the Middle Eastern oil-producing country, easing concerns in the market about potential conflicts in the Middle East and disruptions in the region’s oil supply.
As of 01:34 Greenwich Mean Time (8:34 pm Eastern Time on Sunday), the global benchmark Brent crude futures dropped by 49 cents to $67.56 per barrel, a decrease of 0.72%, after a 50-cent increase at the end of last week.
The U.S. benchmark West Texas Intermediate (WTI) crude oil price fell by 42 cents to $63.13 per barrel, a decrease of 0.66%, following a 26-cent increase at the end of last week.
Tony Sycamore, a market analyst at UK financial services company IG, stated, “Crude oil prices have retreated in early trading this week as the market breathed a sigh of relief over the constructive nuclear talks between the United States and Iran in Oman.”
“With more negotiations on the horizon, immediate concerns about disruptions in Middle Eastern supply have visibly eased,” he added.
Although differences remain, Iran and the United States have committed to continue indirect nuclear negotiations, with both sides claiming positive discussions that took place in Oman last Friday. This development alleviated market concerns that had arisen from the U.S. military buildup in the Middle East, with fears that a breakdown in negotiations could bring the region closer to the brink of war.
Investors are also worried about potential disruptions in oil supply from Iran and other oil-producing countries in the region, as about one-fifth of the world’s total oil consumption exports pass through the Strait of Hormuz between Oman and Iran.
Due to the easing tensions, the prices of these two major benchmark crude oils both dropped by over 2% last week, marking the first decline in seven weeks.
Investors are simultaneously keeping a watchful eye on another effort by the United States and the European Union to limit Russia’s oil export revenue to curb the war it is conducting in Ukraine. This includes a provision in a recently reached framework agreement between the U.S. and India, in which India has pledged to switch to purchasing oil from the United States and Venezuela instead of Russia.
(Reference: Reuters)