Diplomacy Eases Oil Price Tension Amid Fresh Middle East Risks

Oil prices have dipped as traders weigh signs of de-escalation talks between the US and Iran against fresh risks to Middle East oil supplies.

Brent crude fell by 0.69% to $105.85 a barrel, while the US benchmark WTI also declined after a volatile week that included a sharp jump in prices a day earlier, according to Reuters.

The price drop is attributed to reports of US and Iranian negotiators discussing a phased plan that could include reopening the Strait of Hormuz and easing US economic restrictions on Iran.

This matters because the Strait of Hormuz is a key shipping chokepoint, and if it looks less likely to be disrupted soon, traders tend to price in less geopolitical risk premium into oil prices.