Oil prices fell for the first time in three days after Iran confirmed it would hold talks with the United States, easing the immediate risk of military strikes against the OPEC member oil producer.
Brent crude fell towards $68 a barrel, after having risen by 4.8% during the previous two sessions, while West Texas Intermediate crude traded below $64 a barrel.
Iranian Foreign Minister Abbas Araqchi confirmed in a social media post that the negotiations will be held in the Sultanate of Oman on Friday, specifying the location of the meeting.
Warren Patterson, head of commodity strategy at ING Group in Singapore, said: Despite some continuing hostile rhetoric, the market appears to be focused on the talks scheduled for Friday between Iran and the United States, and the possibility that the diplomatic track will take its course.
He added: But it is clear, as reflected in recent price movements, that there is a great deal of uncertainty about how this trajectory will end.
Divergent positions regarding negotiation standards
The divergent positions on the parameters of negotiations between Washington and Tehran mean that it remains unclear whether the two sides are realistically able to bridge the major differences at a time when tensions are escalating in the region, which provides about a third of the world's crude oil supply.
This has reintroduced a risk premium to oil prices, which have recovered this year after falling in the second half of 2025 as signs emerged of a possible global supply glut.
Traders also monitored peace talks concerning Ukraine this week, which will be affected by attacks from Russia, a major oil producer, on Ukraine's energy infrastructure, according to Ukrainian President Volodymyr Zelensky. Zelensky asked his American counterpart, Donald Trump, for more weapons to force Moscow to end the war.
In other news, data released Wednesday by the U.S. Energy Information Administration showed that U.S. crude oil inventories fell to their lowest level in a month, but the decline was less than previous expectations, which had indicated a larger drop.
By 2:20 p.m. Singapore time, Brent crude futures for April settlement had fallen 2% to $68.05 a barrel, and West Texas Intermediate crude futures for March delivery had dropped 2.1% to $63.75 a barrel.
