Oil settled lower in whipsaw session as extended US-Iran talks erode risk premium

Oil prices edged lower on Thursday following a highly volatile trading session, as investors systematically priced out geopolitical risk premiums after diplomatic talks between the US and Iran were extended, easing fears of an immediate military conflict.

Brent crude futures settled down 10 cents, or 0.14%, at $70.75 a barrel, while US WTI slipped 21 cents, or 0.32%, to $65.21.

The benchmarks experienced whipsaw moves throughout the day, driven by real-time developments from the indirect nuclear negotiations in Geneva. Crude initially spiked more than $1 a barrel on media reports that talks had stalled over stringent US demands, including zero uranium enrichment and the handover of all 60% enriched stockpiles. However, prices sharply reversed course after both Iranian and Omani officials cited significant progress, confirming that the negotiations would be extended into next week and effectively sidelining the immediate threat of a US military strike.

With the immediate geopolitical temperature lowered, market focus returned to underlying bearish fundamentals. Market participants noted that the late-session selloff was a purely sentiment-driven removal of the disruption premium. Stripped of the fear of imminent sanctions or blockades in the Strait of Hormuz, the market remains weighed down by structural headwinds: physical supply remains long, Iran continues to front-load its exports, and traders are actively pricing in the prospect of OPEC+ adding barrels to the market in April.

Written by: Aiman Haikal