Oil Crashes Over 4% as Trump Says Iran Ready to Negotiate

TLDR

• Crude oil prices fell more than 4% on Monday after President Trump said Iran is engaging in serious negotiations with the United States.
• Brent crude dropped 4.6% to $66.10 per barrel while WTI crude declined 4.7% to $60.92 per barrel in Asian trading.
• The price decline follows OPEC+ decision to maintain current oil production levels at their Sunday meeting without providing future guidance.
• A strengthening US dollar and trader profit-taking after recent six-month highs added downward pressure on oil markets.
• Diplomatic progress between Washington and Tehran reduced the geopolitical risk premium that had supported crude prices in recent weeks.

Crude oil markets saw steep losses on Monday as diplomatic developments between the United States and Iran eased supply concerns. Prices retreated after hitting six-month highs last week on Middle East tensions.

Brent crude futures dropped 4.6% to $66.10 per barrel during Monday’s session. West Texas Intermediate crude fell 4.7% to $60.92 per barrel. The sharp declines marked a reversal from recent gains driven by geopolitical worries.

President Trump revealed over the weekend that Iran was “seriously talking” with his administration. The comments followed statements from Iranian officials confirming they were working to arrange negotiations with Washington. This diplomatic opening reduced market fears about potential military conflict in the oil-producing region.

Trump had previously threatened military action against Iran over nuclear program concerns. The US president deployed naval assets to the Middle East in recent weeks. These moves had pushed crude prices higher as traders anticipated possible supply disruptions.

Risk Premium Evaporates From Oil Markets

The prospect of US-Iran negotiations removed some of the risk premium from crude prices. Markets had been pricing in the possibility of strikes on Iranian facilities or broader regional conflict. ANZ analysts stated the diplomatic progress lowered immediate supply concerns while noting US military buildup continues.

Oil had climbed to levels not seen since August 2025 last week. Extreme cold weather in North America and a production outage in Kazakhstan had also supported prices. Monday’s decline represented profit-taking after those gains.

A stronger US dollar contributed to the price weakness. The greenback rallied after Trump nominated Kevin Warsh to lead the Federal Reserve. Dollar strength makes commodities priced in the currency more expensive for international buyers.

OPEC+ Holds Production Steady

The Organization of Petroleum Exporting Countries and partners met Sunday to review output policy. The group decided to keep oil production at current levels for March. OPEC+ offered no indication of future production plans.

The cartel had increased output by roughly 2.9 million barrels per day during 2025. In November, OPEC+ announced an indefinite pause on additional production increases. Oil prices had fallen approximately 20% over the past year before last week’s rally.

The lack of forward guidance reflects uncertainty about global economic growth and geopolitical factors. OPEC+ appears to be taking a wait-and-see approach to market conditions.

TD Securities strategist Ryan McKay warned that further price declines could occur. He noted this scenario would be likely if reduced geopolitical risks combine with weak market fundamentals. Demand concerns and potential oversupply have weighed on oil markets throughout 2025.

The broader commodities complex also experienced selling pressure on Monday. The synchronized decline across multiple commodity markets added to oil’s losses. Traders shifted focus from supply risks back to fundamental demand and inventory data.

Iranian negotiations mark a shift in the factors driving crude prices. Weather disruptions and geopolitical tensions had temporarily overshadowed concerns about weak global demand. The diplomatic breakthrough now puts fundamentals back in focus for oil traders.

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