Oil Prices Decline Amid Signs of Easing Tensions Between Washington and Tehran

Oil prices fell for the second consecutive day on Tuesday as markets reacted to potential easing tensions between the United States and Iran, compounded by the strengthening U.S. dollar, which has put pressure on global crude prices.

Trading Update: Brent and West Texas Intermediate Prices Drop

Brent crude futures decreased by 0.5% to $65.91 per barrel at 03:30 GMT. Similarly, West Texas Intermediate dropped to $61.83 per barrel, continuing the downward trend that began during Monday's trading session.

Political Statements Impact Market Sentiment

This decline followed a significant drop of over 4% in oil prices during Monday's trading, spurred by comments from U.S. President Donald Trump indicating that Iran is engaging in "serious" discussions with Washington, which heightened expectations for a reduction in tensions with the OPEC member.

In this context, sources from both the U.S. and Iran indicated that nuclear talks are expected to resume on Friday in Turkey, a step that could lead to a new agreement aimed at reducing geopolitical tensions in the region.

U.S. Warnings Heighten Market Caution

Despite signs of potential easing, Trump warned that the movement of large U.S. warships towards Iran could result in "serious consequences" if diplomatic efforts fail, keeping markets in a cautious and expectant state regarding political developments.

Market Fluctuations Driven More by Sentiment than Fundamentals

Priyanka Sachdeva, a senior market analyst at Philip Nova, noted that the recent volatility in oil prices reflects the influence of psychological factors and investor sentiment more than actual changes in supply and demand fundamentals. She added that gains made by markets last week quickly receded as volatility in riskier assets increased, and the absence of new geopolitical escalations, along with discrepancies in macroeconomic data, contributed to oil's inability to maintain its gains.