Oil Prices Slide as US Expands Sanctions on Iran

Crude oil steadied above $96 per barrel on Wednesday after a sharp decline earlier this week, as investors weighed the possible outcome of ongoing peace negotiations between the US and Iran. Qatar’s Foreign Ministry spokesperson stated that both countries are evaluating new proposals put forward by mediators to bridge their differences. However, Iran’s national security chief indicated in a social media post that Washington’s response remains unsatisfactory. The US also conducted defensive strikes against Iran earlier this week, targeting surface-to-air missile systems used against American assets. However, the limited scope of the strikes suggested no immediate return to large-scale military operations. The US oil benchmark is down more than 7% so far this week, supported by optimism over a potential diplomatic breakthrough and signs of a recovery in Middle Eastern crude exports.

Crude oil rebounded slightly to near $97 a barrel on Tuesday after plunging more than 7% in the previous session. Reports indicated that the US and Iran remained far from reaching a deal to end their war, while mediator Qatar stepped up efforts to bridge differences and avert renewed escalation after the US midterm elections. Overnight, the US reportedly carried out defensive strikes on Iran, targeting surface-to-air missiles used against US assets. The strikes appeared limited and did not signal a return to major combat operations. Meanwhile, US President Trump renewed threats of possible military action. Qatari mediators traveled to Tehran on Monday night to discuss a version of a draft US-Iran deal that had been under consideration. The secretary of Iran’s National Security Council later said the US response to Iran's demands “was not convincing.” Still, Qatar’s Foreign Ministry spokesperson said both the US and Tehran were reviewing proposals put forward by mediators.

Crude oil fell below $96 a barrel on Tuesday, reaching a three-week low and extending the previous session’s 7.4% decline. Prices reversed earlier gains as President Donald Trump announced that Washington would end its financial support for Israel by year-end, following an agreement with Prime Minister Benjamin Netanyahu to discontinue the $4 billion aid programme. Trump said Israel no longer needed the assistance, although the US would remain willing to provide other forms of support. Also, US Energy Secretary Chris Wright said overnight attacks on Iran’s Qeshm Island had not affected oil flows, while indicating that additional refined products would be supplied from the Persian Gulf and India. Meanwhile, Iran signaled greater flexibility towards diplomacy, with President Masoud Pezeshkian saying Supreme Leader Mojtaba Khamenei had authorized discussions on issues previously considered non-negotiable.