Oil Prices Drop More Than 4% as US-Iran Talks Ease Geopolitical Risk Premiums

WTI crude oil futures fell more than 4% on Monday, slipping below $63 per barrel, retreating from multi-month highs as traders closely monitored developments in diplomatic talks between the United States and Iran that could reduce geopolitical risk premiums in energy markets.

Over the weekend, Donald Trump stated that Iran was “talking seriously” with the United States, following signals from Tehran that preparations for negotiations were underway. The comments marked a notable shift from last month’s heightened tensions, when Washington repeatedly warned of potential military action in response to Iran’s domestic crackdown on protests, while Iranian officials threatened retaliation.

Those earlier tensions had pushed oil prices sharply higher in January amid concerns over potential supply disruptions across the Middle East.

Adding to signs of de-escalation, reports indicated that the Islamic Revolutionary Guard Corps Navy has no plans to conduct live-fire military drills in the Strait of Hormuz, a critical global energy transit corridor through which roughly one-fifth of the world’s oil supply passes.

Meanwhile, the OPEC+ reaffirmed on Sunday its earlier decision to keep production levels unchanged in March, extending the final phase of its three-month supply freeze.

Market analysts note that oil prices are likely to remain volatile in the near term as investors weigh geopolitical developments, supply discipline among major producers, and broader macroeconomic signals affecting global energy demand.