Crude Slips as Tariffs Counter Iran Conflict Relief

Key Moments

Oil Futures Retreat in Early Trading

Oil prices declined around 1% on Monday as traders responded to fresh U.S. tariff developments and progress toward renewed nuclear negotiations between the United States and Iran, which eased fears of an immediate escalation in regional tensions.

By 0354 GMT, Brent crude futures had fallen 76 cents, or 1.06%, to $71 a barrel. U.S. West Texas Intermediate (WTI) crude futures were down 75 cents, or 1.10%, at $65.75 a barrel.

Tariff Escalation Rekindles Growth Concerns

Market sentiment was shaken after President Donald Trump announced on Saturday that he would increase a temporary tariff on U.S. imports from all countries from 10% to 15%. The move takes the levy to the maximum level permitted under the law and follows a U.S. Supreme Court decision that struck down his earlier tariff program.

“The tariff news over the weekend has resulted in some risk aversion flows this morning, which can be viewed in the price of gold and U.S. equity futures and this is weighing on the crude oil price,” IG Markets analyst Tony Sycamore said.

China responded on Monday by saying it is conducting a “full assessment” of the U.S. Supreme Court’s tariff ruling. Beijing also called on Washington to remove “relevant unilateral tariff measures” that it has imposed on its trading partners.

The tariff developments added a new layer of uncertainty to the outlook for global economic growth and, by extension, future fuel demand.

Geopolitical Risk: Iran Talks Temper Conflict Premium

The renewed tariff risk came as markets reassessed geopolitical tensions in the Middle East. Concerns over a potential military confrontation between the U.S. and Iran had driven Brent and WTI up more than 5% last week, but the prospect of further diplomacy has partially offset that risk premium.

Oman’s Foreign Minister Badr Albusaidi said on Sunday that Iran and the United States will hold a third round of nuclear talks on Thursday in Geneva.

A senior Iranian official told Reuters that Iran has signaled its willingness to make concessions on its nuclear program in exchange for sanctions relief and recognition of its right to enrich uranium.

“Brent has at least $10 per barrel Iran risk premium but as long as the threat of U.S. strikes hangs over diplomatic efforts, with a constant looming reminder from the naval armada amassed by Washington in the Middle East, it is hard to see crude sliding substantially,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.

Goldman Sachs Outlook: Surplus Market With Downside Risks

Goldman Sachs provided a longer-term view, indicating that it expects the global oil market to remain in surplus in 2026, assuming there is no Iran-related disruption to supply.

The bank raised its Brent and WTI price forecasts for the fourth quarter of 2026 by $6, to $60 a barrel and $56 a barrel, respectively. The revision was attributed to lower inventories in OECD countries.

However, Goldman Sachs analysts cautioned that potential sanctions relief for Iran and Russia could lead to faster builds in landed stocks and open the door to higher supply over time. They said such developments could pose downside risks of $5 and $8 to fourth-quarter 2026 prices.

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Longer-Term Price Scenarios