The possibility of the US-Iran talks restarting leads to falling oil prices; expectations of easing tensions in the Middle East

International oil prices fell within five trading days due to the re-emergence of the possibility of new negotiations between the United States and Iran. As expectations of easing military tensions in the Middle East region increase, concerns over supply disruptions that previously pushed up oil prices have eased.

As of the 24th Eastern Time, the West Texas Intermediate (WTI) crude oil price for June delivery on the New York Mercantile Exchange dropped $1.45 from the previous trading day, a decline of 1.51%, closing at $94.40 per barrel. The four-day upward trend that had been ongoing since the 20th came to an end on that day. International oil prices are sensitive to variables that could affect supply, such as war, sanctions, and disruptions to maritime transportation, but on that day, the market was more inclined to see the possibility of restarting negotiations rather than the risk of conflict escalation.

During trading, oil prices accelerated their decline following reports of developments involving Iran and the United States. Middle Eastern media reported that Iranian Foreign Minister Abbas Araghchi was heading to Islamabad, Pakistan, and later Araghchi stated he would visit Pakistan, Oman, and Russia to discuss bilateral issues. Subsequently, CNN reported that Middle East envoy Steve Witterkoff and Jared Kushner would travel to Pakistan, and the market quickly reflected the possibility of the two countries returning to the negotiating table in the price. As a result, WTI briefly fell to $92.71 per barrel.

The White House also publicly confirmed the possibility of negotiations. Spokeswoman Karoline Leavitt said in an interview with Fox News that Special Envoys Witterkoff and Kushner would return to Pakistan on Saturday morning to participate in negotiations. She explained that U.S. President Donald Trump, Secretary of State Marco Rubio, and the national security team are monitoring the situation, and everyone would be prepared to go to Pakistan if necessary. After negotiations held in Islamabad on the 11th and 12th, expectations for a possible dialogue again after about two weeks have thus been strengthened.

However, the market did not interpret this decline as a direct sign of easing tensions. Analyst Sol Kavonik from energy research firm MST Marquee pointed out that even if a peace agreement is reached, Iran might gain confidence to threaten the Strait of Hormuz more frequently in the future. The Strait of Hormuz is a critical channel for Middle Eastern oil transportation, so risks in the region directly impact oil prices. Tamas Varga from energy brokerage PVM also stated that variables related to Iran could fluctuate significantly over the weekend, leading investors to reduce long positions. This trend could further increase oil price volatility in the short term depending on future negotiations.