Oil prices fell sharply on Monday after US President Donald Trump said Iran was “seriously talking” with Washington, easing fears of an escalation with the OPEC member that had earlier pushed crude to multi-month highs.
Brent crude futures dropped $2.81, or 4.1%, to $66.51 per barrel, while US West Texas Intermediate (WTI) fell $2.70, or 4.1%, to $62.51 per barrel. The decline followed last week’s rally, during which Brent hit a six-month high and WTI hovered near its strongest levels since late September amid rising US-Iran tensions.
Analysts said Trump’s comments signalled potential de-escalation, reversing the geopolitical risk premium that had supported prices throughout January. Iran’s top security official Ali Larijani also confirmed that arrangements for negotiations were underway, adding to market optimism.
Further weighing on prices was a stronger US dollar, which makes dollar-denominated oil more expensive for non-US buyers. Reports that Iran’s Revolutionary Guards had no plans for live-fire naval exercises in the Strait of Hormuz also reduced supply disruption fears.
Meanwhile, OPEC+ agreed to keep output unchanged for March, maintaining its earlier decision to freeze production increases through March 2026 due to seasonally weaker demand.
Despite geopolitical uncertainties, analysts cautioned that oil market fundamentals remain soft. Capital Economics noted that ample supply and past precedents suggest Brent crude could still face downward pressure toward the end of 2026, even as political risks continue to influence short-term price movements.
