Oil Weakens, Iran Impact Remains & India Key
Oil prices weakened again on Tuesday (February 3), extending their decline for a third day as the market began to "unwind" geopolitical risk premiums. The latest update showed Brent down more than 1% to $65.96/barrel, while WTI fell 1.5% to $61.81/barrel in European trading.
The main driver was easing concerns about regional conflict after Donald Trump stated that talks with Iran on a new nuclear deal could begin within days, with plans for a follow-up meeting reportedly heading this week. As the risk of escalation is perceived as diminishing, the price "insurance" that typically attaches to oil also diminishes.
At the same time, the market is also awaiting confirmation of details regarding a potential US-India trade deal that could directly impact global supply flows. Trump said India's tariffs could be reduced if Narendra Modi agrees to halt purchases of Russian oil—although this claim has not yet been fully confirmed by New Delhi. This issue is crucial because Russian oil shipments to India have reportedly fallen to a more than three-year low, potentially adding to the market's difficult-to-absorb "sanction barrel stocks."
Another contributing factor is the strengthening US dollar, which makes dollar-denominated commodities relatively more expensive for non-dollar buyers. Amid calmer geopolitical conditions, the market is reviving the old narrative: concerns about the oil market facing tight/oversupply, making last month's rally appear fragile.
Last month, prices were boosted by supply disruptions (including from Kazakhstan) and geopolitical risk premiums. However, earlier this week, oil was dragged into a broader commodity selloff—especially after major volatility in metals—which prompted market participants to quickly reduce bullish positions.
Source: Newsmaker.id
