US-Iran Negotiations Confirmed, Oil Prices Fall Sharply
Oil prices fell again on Thursday (February 5th) after Iran confirmed it would open negotiations with the United States. This assurance of dialogue eased market concerns over the risk of a direct military strike against Iran, a major producer in OPEC, leading to some risk premiums being released.
Brent oil weakened by around 2% to around $67 per barrel, after rallying nearly 5% in the previous two sessions. Meanwhile, WTI fell further, around 2.5% to around $63 per barrel. Abbas Araghchi confirmed the schedule for talks in Oman on Friday, helping to ease short-term geopolitical tensions.
Additional pressure came from weak US labor data, particularly the private sector jobs report, which rekindled concerns about an economic slowdown. This sentiment weighed on the outlook for global energy demand, making the market more cautious after a rapid rally in recent days.
However, market participants assessed that the risks had not completely disappeared. The differences between Washington and Tehran regarding the scope of negotiations remain wide, while the Middle East remains the source of approximately one-third of the world's oil supply. This situation has kept oil prices carrying a risk premium, although not as high as during the height of the escalation.
Meanwhile, attention is also focused on developments in the Ukraine conflict. President Volodymyr Zelenskiy asserted that Russia's attack on energy infrastructure could impact peace talks and reiterated his request for additional military support from Donald Trump. These factors are keeping the market on alert for potential disruptions to global energy supplies.
Pressure in the energy market has been exacerbated by a major sell-off in precious metals, with silver plunging more than 17% and gold dropping as much as 3.5%. The combination of easing geopolitical risks, growth concerns, and a cross-asset correction has caused oil prices to enter a consolidation phase after a previous sharp rally.
Source: Newsmaker.id
