Oil Prices Decline Amid U.S.-Iran Thaw and Strong Dollar
Oil prices have declined for the second straight day, driven by expectations of reduced tensions between the United States and Iran, alongside a strong dollar that has exerted downward pressure on prices.
Brent crude is currently priced at $65.91 per barrel, while West Texas Intermediate crude stands at $61.83 per barrel, both down 0.5% from the previous session.
The decline follows a more than 4% drop on Monday, prompted by U.S. President Donald Trump's comments suggesting that Iran is "talking seriously" with Washington, indicating a potential easing of hostilities, as reported by Reuters.
Officials from both nations are expected to resume nuclear discussions next Friday in Turkey. Trump has cautioned that deploying large U.S. warships to the area could lead to "bad things" if an agreement is not reached.
Priyanka Sachdeva, a senior market analyst at Phillip Nova, noted that the recent fluctuations in oil prices are largely sentiment-driven rather than based on fundamental changes. She pointed out that earlier gains could not be sustained due to mixed macroeconomic indicators and the lack of new geopolitical tensions.
Furthermore, the dollar index has risen to its highest level in over a week, limiting oil's potential for recovery, as a stronger dollar diminishes demand from foreign buyers for crude priced in U.S. currency.
On the trade front, Trump announced a new agreement with India aimed at reducing U.S. tariffs on Indian goods from 50% to 18%. In return, India is expected to halt its purchases of Russian oil and reduce other trade barriers, indicating a shift towards sourcing oil from the U.S. and potentially Venezuela.
India has already begun to slow its imports of Russian oil, which peaked at approximately 1.2 million barrels per day in January. This figure is anticipated to decrease to one million barrels per day in February and further to 800,000 in March.
Meanwhile, the OPEC+ alliance has announced it will maintain its production levels for March. Eight member countries—including Saudi Arabia, Russia, the UAE, Kazakhstan, Kuwait, Iraq, Algeria, and Oman—recently raised their production quotas by about 2.9 million barrels per day, effective from April through December 2025, which represents roughly 3% of global demand.
