Oil Prices Fluctuate as Trump Claims Iran Talks Amid Tehran's Denials

Global energy markets experienced volatility following US President Donald Trump's announcement that negotiations with Iran would commence to end the Middle East war and reopen the Strait of Hormuz. Crude oil prices initially tumbled by nearly 5% on Monday after this declaration. However, explicit denials from Tehran regarding direct negotiations heightened market uncertainty, causing oil prices to edge higher again on Tuesday.

President Trump stated on Sunday via his Truth Social platform that Iran and other Middle Eastern countries had requested time to finalize a deal that would ensure the “immediate, complete and total” reopening of the Strait of Hormuz. On Monday, he further indicated that talks would begin that afternoon, adding that he had called off major strikes against Iran to pursue a deal. The US President also urged oil companies to lower gasoline prices, claiming they had “made too much money” from the Iran war.

However, Iranian Foreign Ministry spokesman Esmail Baghaei explicitly denied any direct negotiations with the United States on Monday. Baghaei stated that their only ongoing discussions were with Oman, focused on identifying a new, temporary route for safe passage through the Strait of Hormuz. The Iranian official emphasized that these talks with Oman would not lead to a full reopening of the Strait as long as “US violations” continued. US officials also informed CBS News that no “new” negotiations were planned.

These conflicting statements had a notable impact on markets. Brent crude fell by 4.69% to $83.81 per barrel on Monday, while US West Texas Intermediate (WTI) declined by 4.67% to $80.72. Brent traded as low as $81.55 during the day, with WTI dropping below $79.47. The decline in oil prices boosted US stock indices like the Dow Jones, Nasdaq, and S&P 500, and also led to rallies in European markets. Yet, with renewed uncertainty following Iran's denial of talks, Brent crude edged up by 0.7% to $84.39 on Tuesday, and WTI rose by 0.7% to $80.95. In July, oil prices had surged by 20% to 25% due to renewed hostilities between the US and Iran.

Underlying these developments is the ongoing conflict, referred to as the “Middle East war,” which began in late February with US and Israeli attacks on Iran. This conflict has effectively closed the Strait of Hormuz, a vital waterway through which approximately one-fifth of global oil and gas supplies pass, leading to one of the biggest-ever oil supply disruptions in history. The dispute over control of the Strait of Hormuz remains a central point of contention in US-Iran tensions.

Analysts caution that market volatility is likely to persist. Nikos Tzabouras, an analyst at Tradu.com, highlighted that the “reality on the ground is unchanged” and supply disruptions continue to linger. BCA Research noted that “unresolved risks remain around Hormuz,” suggesting it is too early to aggressively position for lower oil prices. Macquarie analysts projected that Brent crude could reach $150 per barrel if the Strait remains closed through April. Tim Waterer, chief market analyst at KCM Trade, emphasized that the downward movement in oil prices remains “fragile” and could easily rebound if hostilities resume.