Oil Prices Fall Amid Signs of Iran’s Participation in Pakistan Talks

SadaNews - Oil prices fell amid indications that Iran will attend negotiations with the United States in Islamabad, before the ceasefire between the two sides expires.

Brent crude fell by as much as 1.1% to $94.44 per barrel after rising by 5.6% on Monday.

Iran is sending a team to the Pakistani capital, according to individuals familiar with the plans who requested anonymity, although it is unclear who will lead the delegation. Tehran had previously stated it was hesitant to participate in further peace talks with the United States.

Donald Trump said in a phone interview on Monday that Vice President J.D. Vance would leave later on Monday to resume negotiations “either Tuesday evening or Wednesday morning.” The U.S. president added that it is “extremely unlikely” the ceasefire, which expires “Wednesday evening Washington time,” will be extended.

Sharp Fluctuations Anticipated as Negotiations Approach

Oil prices have experienced volatility in recent days amid rapidly changing perceptions regarding the course of negotiations and whether ships can navigate through the Strait of Hormuz, a waterway through which about one-fifth of global crude oil typically passes.

Tensions surrounding Hormuz threaten to exacerbate the global energy crisis and are just one of several sticking points between Iran and the United States, which also include Iran’s nuclear capabilities and Israel’s incursion into Lebanon.

Dylan Wu, a research strategist at Pepperstone Group, stated: "We are either heading towards some form of de-escalation or this could extend into a longer disruption, especially relating to energy supplies."

He added, "The market will be highly sensitive to any developments in the news over the next 24 hours."

Hormuz in Stalemate and Warnings of Long-term Shock

Monday's session witnessed conflicting statements from Trump regarding the timing and feasibility of peace talks. Oil prices continued to gain after he stated that the United States would continue to impose a blockade on the strait against ships linked to Iran until an agreement is reached.

Meanwhile, flows through Hormuz remain in a state of near-complete halt. The crisis reignited over the weekend after the U.S. Navy seized an Iranian vessel while Iranian forces fired on ships and reasserted control over the strait.

On Monday, Chinese President Xi Jinping called for an immediate ceasefire and the restoration of normal transit through the waterway, according to a statement released by the foreign ministry regarding a phone call with Saudi Crown Prince Mohammed bin Salman.

Oil prices could rise to $110 per barrel if maritime disruptions continue in the waterway for another month, according to Citi Group. Global energy markets could experience volatility for two years due to the war, according to Fatih Birol, the executive director of the International Energy Agency.