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Oil Trading at Near a Four-Month Low as Talks Between the U.S. and Iran Progress

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Oil prices weakened early Monday on reports that talks between Iran and the United States are progressing, raising hopes the Strait of Hormuz could fully reopen and allow Persian Gulf energy exports to flow more freely.

West Texas Intermediate crude oil for July delivery was last seen down 1.1% to US$75.05 per barrel, the lowest since March 4, while August Brent oil was down 2% to US$78.97.

The Guardian reported that U.S. Vice President JD Vance said technical talks aimed at formalizing last week's memorandum of understanding between the United States and Iran are progressing well, despite threats directed at Iran that U.S. President Donald Trump posted on social media over the weekend.

A deal between the two countries could fully reopen the Strait of Hormuz, the chokepoint for exports from the Persian Gulf nations that supplied a fifth of daily oil demand prior to the Feb. 28 start to the war. Reuters reported tankers have begun moving through the waterway, with Iran beginning to resume exports while the United Arab Emirates, Kuwait and Iraq are promising to deliver more oil to customers.

"Despite a bumpy start, with Trump issuing fresh warnings towards Iran and Tehran responding with renewed threats to close the Strait of Hormuz, negotiations nevertheless showed signs of progress. The market continues to price in the prospect of an eventual reopening of the Strait and the release of millions of barrels currently stranded in the Persian Gulf.," Saxo Bank noted.

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