Ongoing US-Iran talks ease geopolitical tensions, prompting a 2.5% decline in WTI oil prices to $88.00 amid reduced risk premiums.
Diplomatic efforts between the US and Iran remain on course despite recent military exchanges, a diplomatic source confirmed. The US Central Command conducted operations for a second day, while President Donald Trump warned Iran of consequences for delays in finalizing a deal.
Prior to this, oil markets had priced in heightened geopolitical risks, with WTI crude trading near multi-week highs. Analysts had expected a risk premium of 3-5% due to Middle East tensions, but the prospect of a ceasefire has tempered those concerns.
WTI oil fell 2.5% to $88.00 as risk sentiment improved, reflecting investor relief over de-escalation. Commodity-linked currencies like AUD, CAD, NZD, and ZAR showed muted reaction, holding steady against the USD.