Oil Prices Dip as Traders Weigh US-Iran Tensions Ahead of Key Nuclear Talks

Oil prices slipped on Thursday morning, reversing earlier gains as markets responded to geopolitical developments ahead of anticipated talks between the United States and Iran regarding Tehran’s nuclear programme.

Brent crude futures fell by 49 cents, or 0.7%, to $69.28 per barrel by 9:30 a.m. Saudi time. U.S. West Texas Intermediate (WTI) crude was down 41 cents, or 0.6%, at $67.74. The decline followed a surge of more than 4% in both benchmarks on Wednesday, their highest levels since early April.

The volatility comes as the US moves to relocate personnel from parts of the Middle East amid heightened tensions with Iran. President Donald Trump said the region “could be a dangerous place” but reiterated that Washington would not permit Iran to develop a nuclear weapon. Iran maintains that its nuclear activities are for peaceful purposes.

Increased geopolitical tension has raised concerns about potential disruption to global oil supplies, particularly from the Gulf region. Iran and the US are scheduled to hold discussions in Oman on Sunday, with Iran’s Foreign Minister Abbas Araghchi set to meet US Special Envoy Steve Witkoff to review a new proposal from Washington.

Energy analysts suggest that Wednesday’s rally in oil prices may have been overdone in the absence of any direct or specific threat from Iran.

“There was no concrete intelligence pointing to an immediate Iranian attack,” said Vivek Dhar, director of energy research at Commonwealth Bank of Australia. “The pullback in prices is logical, but Brent is likely to maintain a geopolitical risk premium above $65 until there is clarity from Sunday’s talks.”

Concerns about a wider regional conflict also remain. On Wednesday, Iran’s Defense Minister Aziz Nasirzadeh warned that Iran would target US military bases if hostilities break out. Trump has previously warned that the US would respond militarily if negotiations break down.

The US is partially evacuating staff from its embassy in Iraq and allowing military families to leave posts in Bahrain and other locations, citing elevated security threats. Iraq is OPEC’s second-largest oil producer after Saudi Arabia, making the country a critical player in global supply chains.

Meanwhile, fundamentals provided a mixed signal for oil markets. According to the US Energy Information Administration, crude inventories dropped by 3.6 million barrels last week to 432.4 million, a sharper decline than the 2 million-barrel draw forecast by analysts.

Despite Thursday’s modest decline, market analysts expect continued price fluctuations tied to the outcome of the upcoming US-Iran meeting and the broader geopolitical landscape.