Oil prices dropped sharply Monday morning as progress in nuclear negotiations between the United States and Iran eased global supply concerns.WTI crude fell to $63.57 per barrel while Brent crude decreased to $65.45 per barrel, both declining more than 1% in early trading.
The weekend brought significant developments in the diplomatic sphere that rattled energy markets.Iran and the United States agreed Saturday to begin drafting a framework for a potential nuclear agreement.
Irans foreign minister characterized the discussions as constructive, noting both sides reached better understanding on key principles.Market participants reacted swiftly to this diplomatic breakthrough.
Expert-level meetings will commence in Oman Wednesday, with a follow-up session planned for Saturday to evaluate progress.These talks represent a potential turning point for global oil supply dynamics.
The nuclear discussions appear to be advancing relatively well according to Warren Patterson of ING Groep.Oil Prices Slide as U.S.-Iran Nuclear Talks Show Progress.
(Photo Internet reproduction)This progress alleviates significant supply risks that previously supported higher prices.
Markets now anticipate the possible return of Iranian crude exports if sanctions ease.Oil Market Faces PressureThis downward pressure comes after oil prices settled more than 3% higher on Thursday before markets closed for Good Friday.
Both benchmarks have declined approximately 11% since the beginning of 2025, reflecting persistent bearish sentiment.Multiple factors continue to weigh on crude prices beyond the Iran negotiations.
Concerns about global economic growth amid escalating trade tensions remain prominent.
The US recently imposed hefty tariffs on Chinese goods, raising fears about reduced energy demand.OPEC+ still plans to increase production by 411,000 barrels per day in May despite market weakness.
This decision reinforces oversupply concerns as JP Morgan projects a substantial oil surplus developing throughout 2025.Not all indicators point downward, however.
Chinas crude oil imports increased nearly 5% in March compared to last year.
These purchases, particularly Iranian oil shipments, occurred before the US implemented tighter sanctions targeting Chinese importers.Technical analysts observe WTI crude testing key support levels around $61.65 with resistance at $63.65.
Brent crude displays similar bearish patterns with support near $59.15 and resistance at $71.65.Looking ahead, the US Energy Information Administration projects Brent prices averaging $67.87 per barrel in 2025, a downward revision from previous forecasts.
This adjustment reflects expectations of building global oil inventories through 2025 and into 2026.Market attention now focuses on Wednesdays expert-level discussions in Oman, which could significantly impact energy prices if progress continues toward a nuclear agreement with Iran.