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US Oil Update: Crude Slides as Trump, Iran Send Mixed Signals on Peace Talks

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Crude futures settled lower in after-hours trading on Monday as markets weighed conflicting signals from President Trump and Iranian officials over the prospects for peace talks, adding uncertainty to the outlook for Middle East conflict and crude supplies.

Front-month West Texas Intermediate crude futures tumbled by 5.4% to $80.06 per barrel, while Brent futures retreated by 4.7% to $83.77/bbl.

Saxo Bank strategists said crude oil traded lower on Monday after Trump chose not to pursue further attacks against Iran over the weekend, though prices rebounded from intraday lows.

President Trump said on Monday that talks with Iran were underway, warning that it was a "last chance" for Tehran to sign a good deal to end the five-month-old war.

Earlier on Monday, Trump alleged Iranian leaders were being "duplicitous," warning that the US would not allow Iran to develop a nuclear weapon.

The US President said Iran had sought a meeting with US officials and that talks had begun, with additional discussions expected in the near future.

On Sunday, the US President said that he had called off a planned strike on Iran after receiving a request from Tehran and other countries in the Middle East.

Gelber & Associates strategists said that crude is trading near $79.60/bbl as the market unwinds a portion of its geopolitical risk premium following the cancellation of planned US strikes on Iran and renewed hopes for negotiations over the Hormuz.

Iran's Foreign Ministry spokesman Esmaeil Baghaei's remarks contrasted with Trump, saying Tehran was only holding talks with Oman on what route ships can sail through the Hormuz, and it was not currently engaged in negotiations with the US.

"The understanding with Oman on a safe shipping route is a necessary condition for reopening the Strait of Hormuz, but it is not a sufficient one," Baghaei said.

On the supply front, OPEC+ approved an oil production quota increase of about 188,000 barrels per day from September on Sunday. The producer group has raised quotas each month throughout the Middle East conflict, even as supply from the region remains constrained by disruption at Hormuz.

The Oxford Institute for Energy Studies projected that OPEC+ crude production is now forecast to decline by 4 million b/d in 2026, about 500,000 b/d more than previously expected.

Traffic through the Middle East energy chokepoints remained subdued, with Kpler data showing a combined 39 confirmed crossings in the Hormuz and Bab el-Mandeb on Aug. 2.

The US Central Command has redirected 44 commercial vessels, disabled two, and boarded two as of Aug. 3.

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