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US Oil Update: Futures Drop as Trump, Iran Issue Mixed Messages on Peace Talks

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Crude futures sank by over 5% in midday trading on Monday as markets assessed conflicting signals after Iran said there were no talks underway with the US and no plans for any meetings, contradicting President Trump, who had said new talks with Tehran would begin on Monday.

Front-month West Texas Intermediate crude futures retreated 5.5% to $80.03 per barrel, while Brent futures fell 4.9% to $83.61/bbl.

Saxo Bank said that October Brent steadied near $83.50/bbl, down over $4 from Friday's close, but almost $2 higher from $81.55 lows, while September WTI crude oil traded early Monday in Europe just below $80/bbl after an overnight low below $79/bbl.

On Monday, President Trump rebuked Iranian leadership amid signs of a fresh diplomatic dispute erupting over high-stakes negotiations and the control of the vital Strait of Hormuz.

Trump 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.

Meanwhile, Iran's Foreign Ministry spokesman, Esmaeil Baghaei, said Tehran was only holding talks with Oman on what route ships can sail through 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 cartel 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 barrels per day 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 35 commercial vessels, disabled 2, and boarded 2 as of Aug. 3.

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