Oil prices drop as US-Iran talks continue without a deal

Crude oil prices fell by nearly 4% on Monday as traders reacted to the continuation of diplomatic efforts between the United States and Iran. The price movement followed the conclusion of a multi-day negotiation session in Qatar. Although the talks did not produce a final agreement, both sides exchanged revised proposals. The market response reflects a temporary shift in investor sentiment toward a potential diplomatic resolution to the eight-month conflict.

Iranian President Masoud Pezeshkian stated on Monday that Supreme Leader Mojtaba Khomenei has granted the government specific authorities regarding the peace process. Pezeshkian said Tehran intends to resolve the issue through dialogue, according to state media reports. His remarks came shortly after the Iranian Foreign Ministry confirmed that contacts with Washington are ongoing. The ministry noted that the two sides are communicating through mediators despite the complexity of the issues involved.

Foreign Ministry spokesperson Esmaeil Baghaei said the dialogues are continuing but the issue remains complex. He confirmed that the core of the current discussions is based on a seven-step proposal that Iran submitted in September. Baghaei noted that this plan has been condensed to allow for implementation within a two-day timeframe. He clarified that shortening the proposal does not alter Iran's fundamental position that nuclear talks can only resume after all other conditions are verified and met.

The seven-step plan involves the United States ending its blockade of Iranian ports and Iran reopening the Strait of Hormuz. It also includes a US waiver on Iranian oil sales and the cancellation of new sanctions. President Donald Trump rejected the original seven-step proposal in September. Baghaei stated that the question of transferring Iran's highly enriched uranium stockpile to another country was not raised during the recent talks. He said Iran had not agreed to such a transfer.

An official briefed on the discussions said Iranian negotiators departed on Sunday without any immediate problems arising during the session. The official added that a draft proposal is currently being circulated among the parties. Iranian sources indicated that a new US military attack remains more likely than a final deal, despite the diplomatic activity. This assessment stands in contrast to the recent drop in oil prices, which suggests the market is pricing in a higher probability of a resolution.

The conflict, initiated by the United States and Israel on February 28, has disrupted global energy supplies. Iran closed the Strait of Hormuz, while the US imposed a blockade on Iranian ports. The war has also triggered renewed conflict in Yemen and repeated drone and missile strikes by Iran on Gulf states. A Qatari liquefied natural gas tanker was struck by unidentified objects in the Gulf on Friday. The operator, Nakilat, confirmed the incident on Sunday. Attacks on LNG carriers have been rare compared to incidents involving oil tankers in the region.

China and Russia both urged for diplomatic solutions on Monday to prevent a resurgence of military action. Chinese Foreign Minister Wang Yi met with senior Iranian security official Ali Bagheri Kani in Beijing. Wang Yi said all parties should focus on political solutions rather than returning to arms. The Russian Foreign Ministry expressed extreme concern over reports of new military action against Iran and called for increased diplomatic efforts. These statements coincide with the US midterm elections scheduled for Tuesday.

President Trump has stated that there will be no new attack on Iran before the midterm elections. Iran has declared it will respond aggressively to any resumed attacks, with plans to strike targets both inside and outside the Middle East. The next phase of the conflict will be determined by the outcome of the US elections and the progress of the condensed proposal currently under review by both governments.