Oil Falls Sharply: US-Iran Negotiation Deal Eases Tensions
Oil prices weakened in European trading Thursday morning (February 5th) after the market picked up on a key signal: the US-Iran diplomatic path was still alive. Confirmation that the two sides would meet in Oman on Friday prompted market participants to reduce the "war premium" that had been clinging to prices, as the risk of supply disruptions from the Middle East appeared to have eased somewhat.
At 09:05 GMT, Brent fell $1.31, or around -1.89%, to $68.15/barrel. Meanwhile, WTI fell $1.24, or around -1.90%, to $63.90/barrel. This pressure came after the previous session's strong rally—the market seemed to be "shedding" the euphoria and returning to risk-reckoning mode.
The day before, oil had surged around 3% when headlines raised doubts about whether Friday's talks would fail. However, after confirmation from both sides that negotiations were still ongoing (although the format and agenda were still being debated), the market reversed course: the risk premium was reduced, and prices fell.
The problem is, this meeting doesn't mean the drama is over. The gap in positions remains wide: Iran wants discussions to focus on its nuclear program and sanctions relief, while the US is said to be pushing for broader topics such as ballistic missiles, the role of regional proxies, and human rights issues. Therefore, the market remains under pressure to maintain a measure of uncertainty—it's just that today is "cooler" than yesterday.
Beyond geopolitics, traders are also weighing US supply factors. EIA inventory data released Wednesday showed a decline in US oil stocks, but not as steep as some market participants had expected, so price support was not strong enough to stem profit-taking after the rally over the past two days.
Source: Newsmaker.id
