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Oil prices reversed course to close higher Friday after diplomatic talks between the United States and Iran concluded without meaningful progress, heightening concerns about potential supply disruptions from the Gulf region.
Brent crude futures settled at $68.05 per barrel, gaining 50 cents or 0.74 percent, while U.S. West Texas Intermediate crude finished 26 cents higher at $63.55 per barrel, up 0.41 percent. Both benchmarks had fallen in overnight trading but surged more than $1 per barrel during the U.S. session before moderating toward settlement.
Talks End With No Resolution
The negotiations, conducted through Omani mediation, aimed to bridge sharp differences over Tehran’s nuclear program but concluded without agreement. Iranian state television reported the talks had ended, with Iran’s foreign minister stating that negotiators would return to their capitals for consultations before discussions resume.
Prior to the meeting, disagreements over the agenda had already raised investor anxiety about geopolitical risks. Iran sought to focus exclusively on nuclear issues, while the United States wanted broader discussions encompassing Iran’s ballistic missile program and support for regional armed groups.
“We keep going back and forth on this Iran situation,” said John Kilduff, partner at Again Capital. “It’s better one day or even one hour then worse the next. It’s status quo nervousness over Iran.”
Gulf Export Routes at Stake
The failed talks carry significant implications for Middle Eastern oil flows, as approximately one-fifth of global oil consumption passes through the Strait of Hormuz between Oman and Iran. Saudi Arabia, the United Arab Emirates, Kuwait and Iraq export most of their crude through this critical waterway, alongside fellow OPEC member Iran.
Any escalation of tensions between Washington and Tehran could potentially disrupt these vital energy supply routes that underpin global markets.
Broader Market Pressures
Despite Friday’s gains, oil prices faced weekly declines driven by broader market selloffs and persistent expectations of oversupply. Saudi Arabia contributed to bearish sentiment by cutting its Arab Light crude official selling price to Asia for March to approximately a five-year low Thursday, marking the fourth consecutive month of price reductions.
Separate supply concerns emerged from Kazakhstan, where planned oil exports could drop by up to 35 percent this month via the main Russian route, according to four trading sources. The reduction stems from the giant Tengiz oilfield’s slow recovery following power facility fires in January.
What’s Next
Market analysts suggest oil prices could decline further if regional conflict prospects diminish, though the current diplomatic impasse maintains uncertainty. The resumption of talks remains unclear as both sides return to their capitals for consultations on next steps.
Sources: Financialpost, CNA, Economic Times
