Oil drops 3% in response to progress in nuclear negotiations between Iran and the U.S. After months of talks, both sides have made concrete declarations that could pave the way for increased Iranian oil exports, which have so far been restricted by U.S. sanctions.
Since the beginning of the year, oil prices have been under pressure due to weak demand, concerns over the global economic outlook, and rising production. Today’s news of progress in talks between the two oil powers has further dampened investor sentiment. Tehran declared its willingness to forgo nuclear weapons in exchange for the lifting of sanctions, while Donald Trump confirmed “significant progress” in the negotiations, stating that “both sides have essentially accepted the terms.”
So far, the U.S. has sanctioned Iranian companies exporting oil to China. Treasury Secretary Scott Bessent emphasized that “the United States will target Iran’s main sources of revenue as long as the country continues to support terrorism.” Lifting the restrictions would grant Iran access to global markets, adding to the already growing oversupply.
After a week of gains, the topic of trade negotiations between China and the U.S. has lost momentum. Investors are gradually distancing themselves from the recent optimism and the idea of a sudden rebound in oil demand, halting the latest price recovery. Source: xStation5
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