WTI crude futures experienced a nearly 3% decline on Monday, slipping to around $63 per barrel. This decrease comes after hitting multi-month highs, following a statement from US President Donald Trump over the weekend indicating that Iran was engaged in earnest discussions with Washington. Tehran's top security official, Ali Larijani, also confirmed via social media platform X that preparations for talks were underway.
The previous month's surge in oil prices was largely driven by escalating geopolitical tensions, as President Trump continually threatened military action against Iran should it not agree to a nuclear accord, while Iran countered with threats of its own. These heightened tensions raised concerns about potential disturbances in the Strait of Hormuz, a critical chokepoint for global energy supplies situated between Iran and the Arabian Peninsula, through which tankers transport crude oil and LNG daily.
Additionally, the increase in oil prices during January was bolstered by geopolitical unrest in Venezuela, production interruptions in Kazakhstan, freezing US production activities, and more stringent US restrictions on the purchase of Russian oil.
