Oil Prices Snap Three-Day Rally as US-Iran Talks Ease Supply Concerns
International oil markets witnessed a significant reversal on Thursday, February 5, as prices fell nearly 1%, breaking a three-day rising streak. This decline came after the United States and Iran agreed to hold negotiation talks in Oman, which helped alleviate fears of a potential military confrontation that could disrupt crude supplies from the critical Middle East region.
Market Reaction and Price Movements
Brent crude futures, the global benchmark, slipped 1.4% to settle at $68.47 per barrel. Similarly, U.S. West Texas Intermediate crude fell by 91 cents, also representing a 1.4% decline, to reach $64.23 per barrel. Meanwhile, in the domestic Indian market, MCX crude oil prices experienced a more pronounced drop of 2%, falling to the ₹5,700 level on Thursday.
Details of the US-Iran Negotiation Talks
Iranian Foreign Minister Abbas Araghchi confirmed through a social media post that the talks with the United States would take place in Oman on Friday. However, significant differences remain regarding the framework of these negotiations, creating uncertainty about whether the two sides can meaningfully narrow their gaps amid heightened regional tensions.
According to a Reuters report, Iran has expressed openness to discussing its nuclear program, including uranium enrichment, with Western countries. In contrast, the United States also wants to include discussions on Iran's ballistic missiles, its support for armed proxy groups across the Middle East, and its treatment of its own citizens.
Geopolitical Impact on Oil Supply Dynamics
The Middle East region accounts for nearly one-third of global crude supply, and these geopolitical concerns have reintroduced a risk premium into oil prices. Bloomberg reports that oil prices had climbed earlier this year after falling in the latter half of 2025 due to signs of a swelling global surplus.
Emkay Wealth Management noted in a recent report that oil output from key producers such as Venezuela and Iran had normalized in recent months, with Iran's production reportedly reaching pre-sanctions levels. "A large portion of this output had been directed towards Asian markets, particularly China. However, fresh political developments and evolving geopolitical dynamics have reintroduced uncertainty around the continuity and routing of these supplies to global markets," the asset management firm stated.
Crude Oil Price Outlook and Expert Analysis
Emkay Wealth Management believes that global crude oil prices may witness a marginal uptick in the near term amid ongoing geopolitical and supply-side uncertainties. However, the broader outlook for Brent crude remains largely range-bound, with limited scope for a sustained rally.
Joseph Thomas, Head of Research at Emkay Wealth Management, elaborated: "While geopolitical developments could support oil prices in the very short term, the underlying fundamentals suggest that any rally will be limited. With demand growth remaining muted and global inventories expected to rise further, Brent crude is likely to stay range-bound over the medium term. Energy companies and market participants will need to navigate this phase with capital discipline and a focus on operational efficiency rather than relying on price-led growth."
Technical Analysis and Trading Outlook
Rahul Kalantri, Vice President of Commodities at Mehta Equities, provided technical insights, stating that crude oil prices are likely to remain volatile in today's session. "Crude oil is having support at $62.55-61.00 and resistance is at $64.40-65.10 in today's session," Kalantri said.
The announcement of US-Iran talks has provided temporary relief to oil markets, but the fundamental challenges of supply-demand dynamics and ongoing geopolitical tensions continue to create uncertainty for energy investors and market participants worldwide.
