Global crude oil prices plunged more than 4 per cent on Monday after U.S. President Donald Trump indicated that negotiations with Iran were underway, easing fears of Middle East supply disruptions.
Trump has repeatedly warned Tehran of military action if it rejects a nuclear deal or escalates crackdowns on protests blamed on Western interference. On Saturday, he told reporters that Iran was “seriously talking” with the U.S.
Iran’s senior security official Ali Larijani had posted on X that preparations for talks were advancing.
The remarks reversed a rally to six-month highs, prompted by Washington’s deployment of a “massive Armada” toward Iran last week, which raised conflict risks.
LSEG data showed global benchmark Brent crude falling as much as 6.4 per cent to $66.15 per barrel, later down 4.41 per cent. U.S. West Texas Intermediate futures dropped 4.75 per cent to $62.11 per barrel.
Andy Lipow, president of Lipow Oil Associates, tied the slide to backchannel communications, suggesting de-escalation hopes.
“The talks are happening at the same time Iran is threatening a regional war should they be attacked, which could lead to substantially higher oil prices, an outcome that the Trump Administration would like to avoid,” he told CNBC.
Marko Papic, BCA Research macro and geopolitical strategist, said fuel price sensitivity could curb escalation ahead of U.S. midterms. “I do think that President Trump is concerned that if oil prices go up to, you know, $70-$80, he’s going to get even further into a hole ahead of the midterms.”
Extra Venezuelan crude from stockpiles has also boosted supply, as global output exceeds demand despite OPEC+ output freezes.
“While additional quantities of Venezuelan oil are coming to market as offshore and on shore inventories are liquidated and sold, the oil market will also continue to be supported by OPEC+ decision to hold steady its current production levels,” Lipow added.
The group decided Sunday to maintain March quotas unchanged.