Oil settles down over 4% on US-Iran de-escalation, easing supply worries

Published Tue, Feb 3, 2026 · 06:02 AM

Oil prices fell more than US$3 per barrel on Monday after US President Donald Trump said Iran was “seriously talking” with Washington, signaling a de-escalation of tensions with the Opec member, while a stronger dollar and milder weather forecasts also pressured prices.

Brent crude futures fell US$3.02, or 4.4 per cent, to settle at US$66.30 per barrel, while US West Texas Intermediate crude futures fell US$3.07, or 4.7 per cent, to US$62.14 per barrel.

Iran and the US will resume nuclear talks on Friday, officials from both countries told Reuters.

On Saturday, Trump told reporters that Iran was “seriously talking”, hours after Tehran’s top security official Ali Larijani said arrangements for negotiations were underway.

The US president had repeatedly threatened Iran with intervention if it did not agree to a nuclear deal or if it continued killing protesters. The threats underpinned oil prices throughout January, said Phillip Nova analyst Priyanka Sachdeva.

The US dollar also strengthened as currency traders cheered Trump’s nomination of Kevin Warsh as the next Federal Reserve chair. A stronger dollar makes dollar-denominated oil more expensive for investors using other currencies.

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Forecasts of milder weather in the US also pressured oil prices, as diesel futures pulled back sharply, Ritterbusch and Associates said. US futures prices for diesel, used in heating and power generation, fell more than 6 per cent.

Together with tensions in the Middle East, a polar vortex in the US had helped US WTI futures rise 14 per cent and Brent gain 16 per cent in January, PVM analysts said in a note.

With those issues fading in relevance, the focus is returning to a widely anticipated buildup of global oil inventories this year, they said.

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At a meeting on Sunday, Opec+ agreed to keep its oil output unchanged for March. In November, the grouping had frozen further planned increases for January through March 2026 because of seasonally weaker consumption. REUTERS

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