Oil prices declined on Tuesday following an optimistic response from Iranian officials during nuclear talks with the United States, reversing earlier gains spurred by heightened rhetoric from President Donald Trump.
The shift came after Iranian Foreign Minister Abbas Araghchi stated that “a new window of opportunity has opened” following discussions in Geneva. While expressing hope for a sustainable negotiated solution, Araghchi also noted that Iran remains prepared to defend itself against any threat. His comments contrasted with Trump’s recent warnings towards Iran, a major oil producer, which had initially pushed crude prices higher.
West Texas Intermediate (WTI) crude settled down 0.2 percent at $62.75 per barrel, after rising as much as 1.5 percent earlier in the session. Brent North Sea crude fell 1.4 percent to $67.64. Analysts noted that market speculation centres on Iran potentially diluting its most highly enriched uranium in exchange for the full lifting of financial sanctions, though it remains uncertain if such a step would secure a comprehensive agreement.
“There’s speculation that Iran could agree to dilute its most highly enriched uranium in exchange for the full lifting of financial sanctions, but it’s not clear if that will be enough to seal a deal between the two parties,” said Aarin Chiekrie, analyst at Hargreaves Lansdown.
The diplomatic development contributed to a cautious tone across financial markets. Wall Street traded lower in early dealings, with the Nasdaq dropping one percent, the S&P 500 falling 0.2 percent, and the Dow Jones sliding 0.3 percent. European equities, including the FTSE 100, CAC 40, and DAX, managed modest gains, while Tokyo’s Nikkei 225 closed lower. Hong Kong and Shanghai markets remained shut for the Lunar New Year holiday.
In currency markets, the US dollar strengthened against the British pound and the euro following UK data that showed unemployment rising to a five-year high of 5.2 percent in the final quarter of 2024, increasing expectations of an interest rate cut by the Bank of England. The dollar slipped slightly against the yen.
Separately, Germany’s Chamber of Industry and Commerce warned that Europe’s largest economy is unlikely to rebound in 2026, citing geopolitical uncertainty, high costs, and weak domestic demand. Germany returned to marginal growth in 2025 after two consecutive years of recession.
The day’s movements underscore the sensitivity of global markets to geopolitical developments, particularly those involving major energy producers. The interplay between US-Iran diplomacy and oil supply expectations continues to drive short-term volatility, while broader economic concerns weigh on investor sentiment across asset classes.
Key closing figures:
- WTI Crude: $62.75 (-0.2%)
- Brent Crude: $67.64 (-1.4%)
- S&P 500: 6,820.63 (-0.2%)
- FTSE 100: 10,517.01 (+0.4%)
- EUR/USD: $1.1820
- GBP/USD: $1.3526
Source: Channels Television/AFP.
