Oil Prices Steady as Markets Weigh Iran Talks and Supply Risks

Oil prices were little changed on Monday after a volatile week, as investors monitored developments around possible talks between the United States and Iran while remaining cautious about ongoing supply disruptions in the Middle East.

Brent crude futures rose 73 cents, or 0.7 percent, to $109.76 a barrel in early trading. US West Texas Intermediate (WTI) crude slipped 26 cents, or 0.2 percent, to $111.28 per barrel. The relatively muted movement followed sharp gains in the previous session, when WTI surged 11 percent and Brent climbed 8 percent, marking the largest single-day increases since 2020.

Market sentiment has been shaped by uncertainty surrounding the Strait of Hormuz, a key route for global energy supplies that has been largely closed since the conflict began on February 28. The waterway carries oil and petroleum exports from major producers including Iraq, Saudi Arabia, Qatar, Kuwait and the United Arab Emirates.

US President Donald Trump increased pressure on Iran over the weekend, warning that American forces could target key infrastructure if the strait is not reopened. Despite the rhetoric, prices remained stable as traders assessed the likelihood of further escalation.

Reports indicate that the United States, Iran and regional mediators are discussing the framework for a potential 45-day ceasefire that could pave the way for a longer-term agreement. However, uncertainty persists after Iran signalled it is not ready to engage in talks with US officials in the near term, raising doubts about progress toward de-escalation.

Analysts say the continued closure of the Strait of Hormuz is not only a logistical challenge but also a political issue. The ability to reopen the route has become tied to broader strategic considerations between the parties involved.

Supply concerns have prompted refiners to look for alternative sources of crude, particularly in the United States and the North Sea. At the same time, some shipping activity has resumed, with vessels from countries considered friendly by Iran managing to pass through the strait in recent days.

On the supply side, OPEC+ — which includes members of the Organization of the Petroleum Exporting Countries and allies such as Russia — agreed to a modest production increase of 206,000 barrels per day for May. However, the impact of this decision may be limited, as several producers are facing constraints linked to the conflict.

Russian exports have also faced disruptions, with drone attacks affecting operations at a Baltic Sea terminal. Loadings have recently resumed, but the situation highlights the broader fragility of global supply chains.

With geopolitical tensions ongoing and energy routes under pressure, oil markets are expected to remain volatile in the near term as traders watch for any signs of diplomatic progress or further disruptions.