By: Economy Middle East

Crude oil prices decreased on Monday by approximately 1 percent, influenced by the news that the United States and Iran are organizing a third cycle of nuclear negotiations. This development helped alleviate anxieties regarding a broadening regional struggle, though new tariff increases announced by President Donald Trump introduced fresh doubts concerning the trajectory of the global economy and the subsequent demand for fuel. Specifically, Brent crude futures dropped by 74 cents, representing a 1.04 percent decrease, to reach $70.56 per barrel. Simultaneously, U.S. West Texas Intermediate crude futures fell to $65.72 per barrel, marking a decline of 76 cents or 1.14 percent.

New tariffs shift markets

These price shifts followed an announcement by Trump on Saturday, in which he stated his intention to elevate a temporary tariff on U.S. imports from all nations from 10 percent to 15 percent. This adjustment represents the highest threshold permitted by law and comes as a response to the U.S. Supreme Court’s decision to strike down his earlier tariff initiative. In reaction, China noted on Monday that it is currently conducting a full assessment of the U.S. Supreme Court’s tariff ruling and urged officials in Washington to eliminate “relevant unilateral tariff measures” that have been placed upon its various trading partners. This new direction in trade policy effectively countered the rising worries over a potential military clash between the U.S. and Iran, a factor that had previously driven Brent and WTI prices up by over 5 percent during the preceding week.

Diplomatic efforts and supply outlook

Diplomatic channels remain active as Iran and the U.S. are scheduled to participate in a third round of nuclear discussions this coming Thursday in Geneva, according to a statement made on Sunday by Oman’s Foreign Minister Badr Albusaidi. Analyzing the broader supply landscape, Goldman Sachs suggested that the international oil market will likely maintain a surplus throughout 2026, provided there are no supply interruptions linked to Iran. Despite this surplus, the firm increased its Brent and WTI price estimates for the final quarter of 2026 by $6 and $5, bringing them to $60 and $56 per barrel respectively, based on a reduction in OECD inventories.

Nevertheless, the analysts cautioned that potential relief from sanctions for Iran and Russia might speed up the accumulation of landed stocks and release greater supply in the long run. Such a scenario presents downside risks of $5 and $8 to the projected prices for the fourth quarter of 2026.