Oil Slips on U.S.–Iran Thaw Hopes, Strong Dollar

Key Moments

Brent crude traded at $65.96 per barrel, while U.S. WTI stood at $61.81 by 0623 GMT, with both down 0.5%.
Meanwhile, oil extended Monday’s sharp slide of more than 4% after U.S. President Donald Trump said Iran was “seriously talking” with Washington.
Additionally, a stronger U.S. dollar, trade news involving India, and Russian oil flows added pressure to prices.

Market Overview

Feb 3 (Reuters) – Crude prices weakened for a second straight session on Tuesday. Traders focused on signs of easing tensions between the United States and Iran. At the same time, a firmer U.S. dollar reinforced the downside across oil markets.

Contract	Price	Move	Percentage Change	Time
Brent crude futures	$65.96 per barrel	-$0.34	-0.5%	0623 GMT
U.S. WTI crude	$61.81 per barrel	-$0.32	-0.5%	0623 GMT

Both benchmarks followed Monday’s steep decline. Prices fell more than 4% after Trump said Iran was “seriously talking” with the U.S. Investors viewed the remarks as a possible step back from recent tensions with the OPEC producer.

Geopolitics: U.S.-Iran Signals and Nuclear Talks

According to officials from both countries, Iran and the United States expect to restart nuclear talks on Friday in Turkey. However, Trump warned that “bad things” could happen if negotiations fail. He pointed to the movement of U.S. warships toward Iran.

Meanwhile, Iranian President Masoud Pezeshkian said on X that talks should continue to protect Iran’s national interests. He added that progress depends on avoiding “threats and unreasonable expectations.”

Kelvin Wong, senior market analyst at OANDA, linked oil volatility to geopolitical risk. He said recent price swings reflect shifting signals from the current U.S. administration, particularly its inconsistent stance toward Iran.

Dollar Strength Adds to Downside Pressure

Beyond geopolitics, currency moves also weighed on oil. The U.S. dollar index hovered near a one-week high. As a result, dollar-priced crude became more expensive for buyers using other currencies.

ING analysts pointed to U.S. monetary policy signals. They said the dollar strengthened after Trump nominated Kevin Warsh as the next Federal Reserve chair. Consequently, oil prices came under additional pressure.

Trade Developments: U.S.-India Deal and Russian Oil Flows

On the trade front, Trump announced a deal with India on Monday. Under the agreement, U.S. tariffs on Indian goods fall to 18% from 50%. In return, India plans to end purchases of Russian oil and lower trade barriers.

ING analysts said the deal could affect global crude flows. They noted that reduced Indian demand may leave more Russian oil stranded at sea if the shift materializes.

Trump shared details of the agreement after speaking with Indian Prime Minister Narendra Modi. He said India committed to buying oil from the United States and possibly Venezuela.

Outlook: Volatility Expected to Persist

Looking ahead, many traders expect volatility to continue in the near term.

Priyanka Sachdeva, senior market analyst at Phillip Nova, said prices are likely to stay choppy through February. She added that oil will remain highly sensitive to headlines and macro signals, with risks tilted to the downside.