Oil prices declined sharply on Tuesday as indications emerged that the United States and Iran are making progress in nuclear negotiations, easing risk premiums in benchmark futures contracts. West Texas Intermediate crude fell below $63 a barrel after Iranian Foreign Minister Abbas Araghchi stated that the two countries had engaged in “serious and constructive” talks, reaching a general agreement on a set of principles.
This development reversed earlier gains triggered by an Iranian announcement that it would close portions of the Strait of Hormuz to conduct military maneuvers. Crude oil had risen by approximately 10% since the beginning of the year, supported by a combination of supply disruptions, geopolitical risks and the accumulation of sanctioned barrels.
Whereas futures contracts had largely stabilized within a range of $61 to $65 for most of the month, the momentum in diplomatic efforts in the coming days and hours is likely to determine the subsequent path of prices. Brent crude traded at $67.78 a barrel, down 1.27%, at 6:38 a.m. Dubai time.
The United States imposed a new round of sanctions targeting Iran’s oil sector in October 2025, according to a report by Euronews. These sanctions targeted individuals and entities linked to Iran, aiming to disrupt a vast oil smuggling network used to finance activities Washington deems destabilizing, as reported by Al Jazeera in July 2025. The network, allegedly managed by Iraqi businessman Salim Ahmed Saeed, has been operating since 2020, exporting Iranian oil under the guise of Iraqi crude through shell companies and intermediaries.
According to CNN, the decrease in Iranian oil exports to a two-year low coincides with heightened tensions with the United States. Kepler, a commodity information company, reported the decline, with its Head of Middle East Energy, Amina Bakr, noting a significant slowdown in exports to China. She added that increased geopolitical tensions and tightened Western sanctions on Iranian oil trade have slowed shipments as the month nears its end.
Iran is the third-largest oil producer within OPEC, producing around 3.3 million barrels per day, equivalent to approximately 3% of global production, and exports around 1.8 million barrels per day of crude oil and condensate. The potential for disruption to global oil supplies remains a key concern, particularly as the U.S. And Iran continue negotiations.
Invezz reported that Iran poses a threat to the global oil lifeline as nuclear talks with the United States begin. CNN also reported on leaked videos revealing disappointment among Iranian protestors with former President Trump.
According to Majalla, the U.S. Is working to separate Iran from China and Russia, as approximately 80% of China’s oil sources come from Iran.
