Crude Oil Retreats as U.S.–Iran Talks Come Into Focus

Key Moments

Futures Edge Higher but Head for Weekly Loss

SINGAPORE, Feb 6 (Reuters) – U.S. crude futures posted modest gains on Friday yet remained on course for their first weekly decline in seven weeks, as earlier concerns over supply disruptions subsided and attention shifted to U.S.-Iran nuclear discussions scheduled in Oman later in the day.

Brent crude futures added 25 cents, or 0.4%, to trade at $67.80 a barrel at 0353 GMT. U.S. West Texas Intermediate (WTI) crude futures also advanced 25 cents, or 0.4%, to $63.54 a barrel.

Despite the intraday uptick, both contracts have retreated more than 3% from levels near six-month highs reached in late January, when U.S. President Donald Trump threatened to strike Iran. The two countries are slated to hold talks in Oman on Friday.

Price Snapshot

Focus on U.S.-Iran Talks and Geopolitical Risk

The upcoming discussions between Washington and Tehran have drawn close scrutiny from energy markets, although the two sides have not reached agreement on what will be formally addressed. Iran is seeking to limit the agenda to nuclear-related matters, while the United States is pushing to broaden the scope to include Iran’s ballistic missile activities, its backing for armed groups in the region, and domestic human rights issues.

“The two sides remain well apart, leaving tensions elevated. This should see the geopolitical risk premium remain in place,” Daniel Hynes, an analyst at ANZ, said in a note on Friday.

Any deterioration in relations risks disrupting crude shipments through the Strait of Hormuz, a critical maritime chokepoint between Oman and Iran through which roughly a fifth of global oil consumption moves.

Saudi Arabia, the United Arab Emirates, Kuwait and Iraq ship most of their crude exports through this route, as does fellow OPEC producer Iran.

Analysts See Fundamentals Reasserting Themselves

If the talks in Oman help reduce the perceived likelihood of conflict in the region, traders may begin to price out part of the geopolitical risk premium, potentially driving oil benchmarks lower.

“We think that geopolitical fears will give way to weak fundamentals,” Capital Economics analysts said in a note, pointing to a recovery in Kazakhstan’s oil output which will help push oil prices lower, towards $50 per barrel by end-2026.