Oil Prices Drop Amid US-Iran De-escalation: What Investors and Businesses in Oman Should Know
LONDON – Oil prices dropped sharply by more than 4% on Monday following comments from US President Donald Trump that Iran was “seriously talking” with Washington, suggesting a potential easing of tensions with the OPEC member. Additionally, a stronger US dollar exerted downward pressure on prices.
At 11:13 GMT, Brent crude futures declined by $3.34, or 4.8%, to $65.98 per barrel. US West Texas Intermediate (WTI) fell $3.37, or 5.2%, reaching $61.84 per barrel. Both benchmarks had experienced significant gains in January, with Brent rising 16% and WTI increasing by 13%, marking their largest monthly advances since 2022.
Analysts attributed the price drop to a combination of reduced geopolitical risks, improved supply conditions, and a stronger dollar. PVM analyst Tamas Varga explained, “The weakness is the disappearance of the geopolitical risk premium as the US and Iran show tentative willingness to negotiate, combined with the dollar’s strength.”
UBS analyst Giovanni Staunovo highlighted that easing supply disruptions in the US and Kazakhstan also contributed to the decline. Priyanka Sachdeva of Phillip Nova noted that while Trump’s earlier threats toward Iran had supported oil prices in January, the recent downturn is further intensified by the dollar’s renewed strength, which makes oil more costly for buyers outside the US.
Concerns over global supply resurfaced after OPEC+ agreed on Sunday to maintain March production levels unchanged, continuing the freeze on planned output increases from January through March 2026 due to seasonally lower consumption.
Capital Economics commented, “Geopolitical risks mask a fundamentally bearish oil market,” referencing last year’s brief 12-day conflict between Israel and Iran in an already well-supplied market, which is expected to continue exerting downward pressure on Brent prices throughout 2026. — Reuters
Special Analysis by Omanet | Navigate Oman’s Market
The recent easing of US-Iran tensions and steady OPEC+ output signal a potential softening in oil prices, posing risks for Oman’s oil-dependent revenue streams. However, the situation also presents opportunities for businesses to diversify and investors to explore non-oil sectors amid a likely prolonged period of price volatility. Smart entrepreneurs should monitor geopolitical developments closely and consider strategies that hedge against fluctuating oil prices while leveraging Oman’s strategic positioning in the global energy market.
