Oil prices fell by nearly 3 per cent on Monday amid progress in US and Iran nuclear talks and concerns that US-imposed tariffs on trade partners could create economic headwinds, denting global oil demand.
Brent, the benchmark for two thirds of the world's oil, slid 2.8 per cent to $66.06 a barrel at 2.11pm UAE time on Monday. West Texas Intermediate, the gauge that tracks US crude, was down 2.91 per cent to $62.8 per barrel.
Talks between Iran and the US on Tehran's nuclear programme are gaining momentum, with the “unlikely now possible” following progress this weekend in Rome, according to mediators.
The second round of negotiations, led by Iranian Foreign Minister Abbas Araghchi and US envoy to the Middle East Steve Witkoff, ended on a positive note in the Italian city during the weekend. The Oman-brokered talks lasted for four hours and officials declared it a “good meeting” that yielded progress.
“These talks are gaining momentum and now even the unlikely is possible,” Omani Foreign Minister Badr Al Busaidi said on X.
Oman’s Foreign Ministry said the talks resulted in an agreement to move towards the next phase of negotiations aimed at sealing “a fair, enduring and binding deal”.
“The fact that the two sides have now concluded two fruitful rounds of nuclear negotiations over the past fortnight is the bigger development on the Iran front, and at this point, mildly bearish,” Vandana Hari, chief executive of Singapore-based Vanda Insights told The National.
If a deal is struck between the two countries, it could ease some supply concerns if sanctions relief is provided for Iran.
Last week, the US imposed new sanctions on Iran to curb its exports, including against a “teapot” refinery – or small independent oil refiner – based in China.
Meanwhile, this month, US President Donald Trump announced sweeping tariffs on its trade partners, raising concerns that the global economy could slow down and impact oil markets.
The International Monetary Fund in January projected the global economy to expand 3.3 per cent this year, with the US economy set to grow by 2.7 per cent.
The IMF, however, is expected to lower global economic growth when it releases its World Economic Outlook on Tuesday.
“Our new growth projections will include notable markdowns, but not recession,” IMF managing director Kristalina Georgieva, said last week.
“As market focus reverts to the economic impact of Trump’s tariffs, especially with the World Bank and IMF meetings in Washington this week, I expect the souring global growth outlook and sluggish oil demand sentiment will be back centrestage, weighing on crude,” Ms Hari said.
Oil prices settled more than 3 per cent higher on Thursday, posting the first weekly gain in three weeks on hopes of a potential trade deal between the US and the EU and new sanctions on Iran's oil exports.