Oil prices declined Monday as investors welcomed progress in talks between the United States and Iran, raising hopes for a broader agreement that could ease tensions in the Middle East and reduce risks to global energy supplies.
The talks, held Sunday in Switzerland, brought together delegations led by U.S. Vice President JD Vance and Iranian Parliament Speaker Mohammad Bagher Ghalibaf. The meeting came after an earlier session scheduled for Friday was postponed because of renewed fighting between Israel and the Iran-backed Hezbollah movement in Lebanon.
Market sentiment improved after mediators from Pakistan and Qatar reported that the discussions were conducted in a “positive and constructive atmosphere” and produced a framework for continued negotiations.
The talks are focused on Iran’s nuclear program and the reopening of the Strait of Hormuz, one of the world’s most critical maritime trade routes through which roughly one-fifth of global oil and gas supplies pass.
In a joint update, the mediators said both countries had agreed to establish a direct communication channel aimed at preventing incidents in the strategic waterway.
They also announced that a high-level committee had adopted a roadmap designed to achieve a final agreement within 60 days, paving the way for further technical discussions.
Iranian Foreign Minister Abbas Araghchi welcomed the development, saying diplomatic efforts had produced significant progress toward ending the conflict in Lebanon.
The prospect of reduced geopolitical tensions weighed on energy markets, reversing some of the gains recorded during the recent conflict.
Brent crude, the international benchmark, fell 1.7% to $79.19 per barrel in Asian trading, while U.S. benchmark West Texas Intermediate declined 0.6% to $75.37 per barrel.
Oil prices had surged in recent weeks amid fears that escalating hostilities in the Middle East could disrupt global supplies and intensify inflationary pressures worldwide.
Global Markets Mixed
Stock markets delivered mixed performances across Asia as investors assessed developments in the Middle East alongside broader economic concerns.
Technology stocks helped lift markets in Tokyo, Seoul and Taipei, while gains were also recorded in Shanghai, Mumbai and Bangkok.
Japan’s Nikkei 225 rose 1.6% to close at 72,353.96, while South Korea’s Kospi advanced 0.7% to 9,114.55. China’s Shanghai Composite climbed 1.8% to finish at 4,163.10.
Elsewhere, Hong Kong’s Hang Seng Index fell 0.4% to 23,822.25. Markets in Sydney, Singapore, Wellington, Manila and Jakarta also ended lower.
European markets opened with modest gains. London’s FTSE 100 rose 0.1% to 10,368.72, while markets in Paris and Frankfurt also traded higher in early dealings.
Analysts cautioned that despite progress in negotiations, investors remain wary of renewed instability in the region.
“Markets are likely to open with a cautious tone because the situation in the Middle East remains fragile,” said Skye Masters, an analyst at National Australia Bank.
She noted that oil prices could remain volatile as traders continue to monitor diplomatic developments and security conditions in the region.
Currency Markets
The U.S. dollar remained firm against major currencies as investors sought safety amid lingering geopolitical uncertainty.
The euro slipped to $1.1457 from $1.1464 on Friday, while the British pound eased to $1.3210 from $1.3218.
The dollar strengthened against the Japanese yen, rising to 161.72 yen from 161.27 yen.
Sterling remained under pressure following political uncertainty in Britain after recent electoral developments intensified speculation about the future of Prime Minister Keir Starmer’s government.
Investors are closely watching developments in both global diplomacy and domestic politics as they assess potential risks to economic growth, inflation and financial markets.
While optimism surrounding the U.S.-Iran negotiations helped ease concerns about disruptions to global energy supplies, analysts said markets remain vulnerable to any setbacks in the talks or renewed violence in the Middle East.
