Crude oil prices retreated on Monday as signs of diplomatic headway between the United States and Iran lifted market sentiment, reducing fears of a major supply disruption in the Middle East.
Brent North Sea crude dropped 1.7 per cent to $79.19 a barrel, while West Texas Intermediate fell 0.6 per cent to $75.37 a barrel during afternoon Asian trading.
The declines came after mediators Pakistan and Qatar announced that high-level negotiations held in Switzerland on Sunday concluded in “a positive and constructive atmosphere.” The talks, led by US Vice President JD Vance and Iran’s Mohammad Bagher Ghalibaf, had initially been scheduled for Friday but were delayed by renewed fighting between Israel and Hezbollah.
A joint statement from the mediators said both sides had agreed to establish a “communication line” to prevent incidents in the Strait of Hormuz the critical waterway through which roughly a fifth of global oil and gas supplies pass and had outlined “a roadmap towards reaching a final deal within 60 days,” paving the way for immediate technical discussions.
Iranian Foreign Minister Abbas Araghchi said on X that the mediation had delivered “major progress to end the Lebanon War,” further boosting optimism.
Earlier in the day, markets had been rattled by reports that Tehran had considered pulling out of the talks after President Donald Trump threatened additional strikes should Hezbollah continue attacking Israel. The confirmation that negotiations had proceeded tempered those concerns.
“Following the positive response last week to reports of a US-Iran ceasefire, markets are likely to open with a cautious tone,” National Australia Bank’s Skye Masters noted, adding that the oil price “could swing either way, but at current levels the risk is for a lift higher.”
Mixed Session Across Global Markets
Equity markets were uneven. Tokyo’s Nikkei 225 climbed 1.6 per cent to close at 72,353.96, buoyed by technology stocks, while Seoul’s Kospi added 0.7 per cent to 9,114.55 and Shanghai’s Composite Index gained 1.8 per cent to 4,163.10. Hong Kong’s Hang Seng slipped 0.4 per cent to 23,822.25. European markets opened higher, with London’s FTSE 100 edging up 0.1 per cent to 10,368.72.
Sterling remained under pressure following last week’s sell-off triggered by the UK Labour by-election win of Andy Burnham, which intensified expectations that Prime Minister Keir Starmer could step down. The Guardian reported that Starmer was expected to announce his resignation on Monday. Investors grew wary that Burnham’s potential premiership could bring fresh spending commitments, adding to Britain’s existing debt burden.
The pound slipped to $1.3210 from $1.3218, while the euro eased to $1.1457. The dollar firmed to 161.72 yen from 161.27 yen.
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