Possible Iran/U.S. Nuclear Deal Causes A 2% Drop In Oil

Meanwhile, Donald Trump continues to dominate a bearish market: File Image/Pixabay 

A potential de-escalation of geopolitical tensions in the Middle East, although far from assured, was responsible for crude prices falling over 2 percent on Monday – coinciding with the usual demand concerns generated by U.S. president Donald Trump's tariff activity.

Brent settled down $1.70, or 2.5 percent, at $66.26 per barrel, after closing up 3.2 percent on Thursday prior to the Easter holiday; West Texas Intermediate settled down $1.60, also 2.5 percent, to $63.08 per barrel, after settling up 3.5 percent in the previous session.

Iran's foreign minister announced that his country and the U.S. had agreed to create a framework for a potential nuclear deal, following earlier discussions that had been described as yielding "very good progress."

Further talks will resume Wednesday in Oman.

This, said Harry Tchilinguirian, group head of research at Onyx Capital Group, "allows for people to start thinking about the possibility of a solution…..the immediate implication would be that Iranian crude would not be off the market."

Meanwhile, following polls that revealed investors believe Trump's tariff policy will trigger a significant slowdown in the U.S. economy, gold prices rising to another record increase stoked concerns about demand, according to analysts.

But J.D. Joyce, president of financial advisory Joyce Wealth Management, departed from the norm by taking a more measured view of Trump; he stated that distaste for the brash billionaire's methods "could be long-lasting, but also, there's public rhetoric and probably something different going on behind the scenes."

For its part, Bloomberg noted, "A gauge of the dollar fell to the lowest since December 2023 and U.S. stock-index futures retreated after Trump criticized the Federal Reserve," but it added that, "Trading volumes may be lower than usual in Monday's session, with some countries observing holidays to mark Easter."

Also on Monday, Russia downgraded its outlook for exports this year by 5.3 percent to $5 billion and lowered expectations for the price for its Urals oil to $56 per barrel from $69.70.

However, this reportedly won't deter the Kremlin from financing its war machine, since Russia's National Wealth Fund has sufficient resources to cover any oil revenue shortfall for the next 18-24 months, even if crude dropped to $50 per barrel.