Oil prices fell around 4% on Monday after signs of de-escalation between the United States and Iran eased concerns over potential supply disruptions that had recently pushed crude to multi-month highs.
By 2:55 pm AEDT (3:55 am GMT), Brent crude futures were down $2.89, or 4.2%, at $66.43 per barrel. U.S. West Texas Intermediate (WTI) crude declined $2.81, or 4.3%, to $62.40 per barrel.
The drop followed a sharp run-up in the previous sessions, when Brent touched a six-month high, and WTI hovered near its strongest levels since late September, driven by mounting geopolitical tension between Washington and Tehran.
Over the weekend, U.S. President Donald Trump said Iran was “seriously talking” with Washington, suggesting a possible diplomatic opening. The remarks came hours after Tehran’s top security official, Ali Larijani, said arrangements for negotiations were underway.
Trump has repeatedly warned of intervention if Iran does not agree to a nuclear deal or if unrest inside the country continues; rhetoric that has supported oil prices throughout January.
ANZ analysts said shifting messaging from Washington had altered market sentiment. "Trump ramped up pressure on Iran, warning the OPEC member that it must make a nuclear deal or face military strikes. However, it gave up some of those gains on Friday after Trump said Iran wants to make a deal.
"The distinct shift in his messaging has eased concerns of supply disruptions. This removed some risk premium out of the market, even as U.S. military presence in the region continues to build.
"Nevertheless, tension remains high. Iran’s supreme leader warned of a ‘regional war’ if the U.S. were to attack."
Despite the latest pullback, geopolitical risk has not fully dissipated, with military activity in the region still elevated and rhetoric from Iranian leadership remaining firm.
Separately, OPEC+ agreed at a meeting on Sunday to keep oil output unchanged for March. The group had already paused previously planned production increases from January through March 2026, citing seasonally weaker demand.
