US oil prices retreat as confirmed US-Iran talks in Oman ease supply fears

The volatility in the energy markets continues as diplomatic efforts between Washington and Tehran take center stage, overshadowing recent supply-side data.

Oil prices took a sharp dive on Thursday after both the United States and Iran confirmed they would move forward with direct negotiations in Oman this Friday. The news effectively neutralized a 3% price spike from the previous session, which was triggered by rumors that the diplomatic process had reached a stalemate. West Texas Intermediate (WTI) fell approximately 1% to settle near $63.80 per barrel, while international benchmark Brent crude slid over 2% to trade around $68.02.

Market analysts noted that the “risk premium” associated with a potential military confrontation in the Middle East is being priced out as the focus shifts to Muscat. However, the agenda remains a point of contention: Washington seeks to include Iran’s ballistic missile program in the discussion, while Tehran maintains the talks should be strictly limited to nuclear disagreements.

On the data side, the market is balancing diplomatic optimism against tightening domestic supply. According to the latest report, US crude oil inventories fell by 3.5 million barrels (using context: global supply trends often mirror energy demand shifts), defying analyst expectations of a modest build. The Energy Information Administration (EIA) attributed the draw to extreme winter weather conditions that disrupted production across major US oil-producing regions.

For investors, the stronger US dollar is also adding downward pressure on dollar-denominated crude. As the greenback gains strength ahead of key central bank meetings in Europe, the cost of oil for foreign buyers has increased, further capping any potential recovery in prices before the weekend negotiations.