Oil Gains Ahead of US-Iran Talks

Crude oil fell about 5% to below $80 a barrel on Monday after US President Donald Trump called off a planned military strike on Iran and said fresh negotiations with Tehran would begin. Trump said regional allies, including Saudi Arabia, had urged Washington to pursue diplomacy, prompting him to suspend the attack while efforts continue to secure a deal to reopen the Strait of Hormuz. Iran denied holding direct talks with the US but said discussions with Oman were making progress toward improving shipping through the strategic waterway. Elsewhere, Turkey and Iraq extended a key oil pipeline agreement by one year, supporting alternative export routes. Kazakhstan also resumed crude intake through the Caspian Pipeline Consortium after a brief suspension, although exports remain vulnerable to drone attacks targeting tankers. Meanwhile, OPEC+ approved another modest production increase, completing the planned restoration of supply cuts introduced in 2023.

Crude oil dropped more than 5% to below $80 per barrel on Monday after surging over 20% in July, as President Donald Trump announced that peace talks with Iran will resume today after he canceled a planned military strike against the Islamic Republic. Trump said key Middle Eastern allies, including Saudi Arabia, urged him to suspend the attacks and prioritize negotiations, while reiterating his call for the swift reopening of the Strait of Hormuz. Last month, oil prices climbed about 23% after renewed hostilities between the US and Iran shattered the interim peace agreement, with supply disruptions extending from the Strait of Hormuz to the Red Sea. Meanwhile, major OPEC+ producers approved another modest increase in production quotas, completing the planned restoration of output cuts introduced in 2023 and leaving room to boost supplies further once the Middle East conflict comes to an end.

Crude oil prices rose 1% on Friday to around $85 a barrel, capping a more than 20% gain in July, its strongest monthly increase since March, driven by escalating geopolitical tensions and growing concerns over global oil supplies. Iran claimed it attacked two tankers transiting the Strait of Hormuz under US military escort, though Western maritime authorities have not confirmed the incident. Renewed conflict between the US and Iran, Houthi attacks in the Red Sea, and Saudi strikes on Iran-backed groups have heightened risks to key shipping routes. Falling US crude inventories have added further upward pressure on prices. Meanwhile, attacks near Russia’s Black Sea oil export infrastructure, including the Caspian Pipeline Consortium (CPC) terminal, have raised concerns about disruptions to Kazakhstan’s oil exports, an important source for European refiners. Although the CPC decided to continue operations, uncertainty over supply security continues to support higher oil prices.