Oil Prices Retreat as Iran Confirms Indirect US Talks

Oil prices retreated after Iran confirmed that indirect contacts with the United States are continuing through mediators, easing fears of prolonged supply disruptions in the Gulf. Brent crude fell below $89 per barrel, while West Texas Intermediate slipped to $81.99, following earlier highs driven by tensions in the Strait of Hormuz.

Iran’s foreign ministry spokesman, Esmaeil Baghaei, announced that Tehran has received messages from Washington via mediators, indicating that diplomatic channels remain active despite renewed military exchanges in the Gulf. This statement reassured markets that negotiations could still avert a deeper crisis.

According to Reuters, Iran emphasised that any talks with the U.S. would be pursued strictly based on national interests. This stance, while cautious, helped cool speculation of an immediate escalation.

Brent crude: briefly touched $91.42, it’s highest since June 11, before easing to $87.96 per barrel.

West Texas Intermediate (WTI): fell to $81.99 per barrel, after earlier gains.

Analysts noted that the retreat reflects traders balancing geopolitical risks with signs of ongoing diplomacy.

The Strait of Hormuz, which carries about 20 percent of global seaborne oil, has been at the centre of tensions. Renewed fighting between U.S. and Iranian forces raised fears of supply disruptions. However, Iran’s assurance of continued diplomatic engagement reduced the risk premium attached to crude prices.

Higher oil prices have raised concerns about inflationary pressures globally. Analysts warn that if elevated prices persist, they could erode household spending and slow economic growth. However, cooling U.S. inflation and a softer labour market suggest the energy shock may not trigger a new cycle of broad-based inflation.

Asian markets showed mixed performance: Hong Kong gained over 2 percent, while Seoul dropped sharply by 4.46 percent.

European markets were cautious, with London in the red and Paris and Frankfurt edging up.

Wall Street closed lower, as investors rotated out of technology stocks while monitoring Gulf developments.

For Nigeria, a major oil exporter, the easing of prices has dual implications:

Revenue Pressure: Lower crude prices could reduce government earnings, affecting budget implementation.

Inflation Relief: Moderation in global oil prices may ease domestic fuel import costs, offering slight relief to consumers battling high living expenses.

Experts argue that Nigeria must diversify revenue sources to cushion against volatility in global oil markets.