Oil prices declined approximately 1% on Monday as the U.S. and Iran geared up for a third round of nuclear negotiations, alleviating concerns regarding a potential escalation of conflict. Concurrently, President Donald Trump’s new tariff increases introduced uncertainty surrounding global growth and fuel demand. Brent crude futures declined by 76 cents, representing a decrease of 1.06%, settling at $71 per barrel as of 0354. Meanwhile, U.S. West Texas Intermediate crude futures were priced at $65.75 per barrel, down 75 cents, or 1.10%.
On Saturday, Trump announced an increase in the temporary tariff from 10% to 15% on U.S. imports from all countries, reaching the maximum level permitted by law, following the U.S. Supreme Court’s decision to invalidate his earlier tariff program. The tariff developments over the weekend have prompted a shift towards risk aversion this morning, evident in the movements of gold and U.S. equity futures, which are exerting downward pressure on crude oil prices,” noted analyst. On Monday, China announced that it is conducting a “full assessment” of the U.S. Supreme Court’s ruling regarding tariffs and urged Washington to eliminate “relevant unilateral tariff measures” that have been imposed on its trading partners. The tariff decision alleviated escalating worries regarding a potential military confrontation between the U.S. and Iran, resulting in an increase of over 5% in Brent and WTI prices last week.
On Sunday, Oman’s Foreign Minister Badr Albusaidi announced that Iran and the U.S. are set to engage in a third round of nuclear discussions on Thursday in Geneva. Iran has signaled its willingness to offer concessions regarding its nuclear program in exchange for the removal of sanctions and acknowledgment of its entitlement to enrich uranium, according to a senior Iranian official’s statement. “Brent has at least $10 per barrel Iran risk premium but as long as the threat of U.S. strikes hangs over diplomatic efforts, with a constant looming reminder from the naval armada amassed by Washington in the Middle East, it is hard to see crude sliding substantially,” stated Vandana Hari.
Goldman Sachs indicated that the global oil market is projected to maintain a surplus in 2026, contingent upon the absence of any disruptions to supply related to Iran. The firm has also adjusted its forecasts for Brent and WTI for the fourth quarter of 2026, increasing them by $6 to $60 and $56 a barrel, respectively, due to diminished OECD inventories. Goldman Sachs analysts indicated that potential sanctions relief for Iran and Russia might lead to increased stock builds and greater supply in the long term, which could result in downside risks of $5 and $8 to fourth-quarter prices in 2026.