Oil Prices Decline Amid US-Iran Thaw and Strong Dollar
Oil prices have fallen for the second consecutive day, driven by expectations of reduced tensions between the United States and Iran, as well as the strengthening dollar putting pressure on prices.
Brent crude oil prices reached $65.91 per barrel, while U.S. West Texas Intermediate dropped to $61.83 per barrel, reflecting a decline of 0.5% for both compared to the previous session.
Prices plummeted by more than 4% on Monday after President Donald Trump indicated that Iran was "seriously" engaging in discussions with Washington, suggesting a potential de-escalation of tensions between the two nations, according to Reuters.
Officials from both Iran and the United States are expected to resume nuclear talks in Turkey on Friday, while Trump cautioned that the deployment of large U.S. warships in the region could lead to "bad things" if no agreement is reached.
Priyanka Sachdeva, senior market analyst at Philip Nova, noted that recent fluctuations in oil prices are driven more by sentiment than by significant changes in fundamentals, pointing out that previous gains were not sustainable due to varying macroeconomic data and the absence of new geopolitical escalations.
The rise of the dollar index to near-record highs has further restricted oil's ability to climb, as a strong dollar diminishes foreign buyers' demand for dollar-denominated crude oil.
In trade news, Trump announced an agreement with India to reduce U.S. tariffs on Indian goods from 50% to 18%, in exchange for India halting its purchases of Russian oil and lowering trade barriers, suggesting that India might source oil from the United States and potentially Venezuela.
In this context, India has recently begun to slow its purchases of Russian oil, which peaked at around 1.2 million barrels per day in January, with expectations of a decline to one million barrels per day in February and 800,000 barrels per day in March.
Meanwhile, the OPEC+ alliance announced it would maintain production levels in March, after eight member countries—Saudi Arabia, Russia, the United Arab Emirates, Kazakhstan, Kuwait, Iraq, Algeria, and Oman—agreed to increase production quotas by approximately 2.9 million barrels per day from April to December 2025, representing about 3% of global demand.
