Oil prices fell sharply on Monday after US Vice President JD Vance said nuclear talks with Iran had made progress and that the Strait of Hormuz had reopened, unwinding a supply-fear premium that had briefly lifted Brent crude to $82.30 a barrel in early trading.
Brent settled at $77.90 a barrel, down $2.67 or 3.31%, after opening higher on threats from President Donald Trump to resume hostilities with Iran and reports that Tehran had closed the strait. WTI closed at $74.82 a barrel, a decline of $1.78 or 2.32%, while the more actively traded August WTI contract dropped $1.99 to settle at $73.86.
Brokers said senior American and Iranian officials wrapped up a first round of talks in Switzerland on Monday. Those discussions began on Sunday under a memorandum of understanding reached last week to extend a fragile ceasefire, in place since April, by at least 60 more days. Iran’s foreign ministry spokesperson told state news agency IRNA that Tehran had not negotiated over its nuclear programme and had accepted no new commitments.
The US Treasury on Monday issued a general licence permitting the sale of Iranian crude, petrochemicals, and petroleum products through 21 August. UBS analyst Giovanni Staunovo said Iran had resumed oil exports that had been halted earlier this month by a US naval blockade. “These barrels represent additional supply to the market,” he said.
Ship-tracking data showed two crude tankers carrying approximately 2 million barrels transited the Strait of Hormuz on Monday, a sign that traffic through the waterway was recovering after dropping sharply on Sunday.
The UAE, Kuwait, and Iraq also provided additional oil volumes to customers last week. Saudi crude exports fell in April for the second consecutive month to a record low of 3.99 million barrels per day, down from 4.974 million bpd in March, according to the Joint Organisations Data Initiative.
Iraq’s deputy oil minister for exploration and production said on Sunday the country plans to gradually restore crude output to between 4.2 and 4.3 million bpd. ANZ Bank forecast that between 2 million and 3 million bpd would come back online within the first four weeks of recovery, with a further 2 million to 3.5 million bpd potentially returning through the third quarter of 2026 if conditions stabilise. The bank cautioned that between 1 million and 2 million bpd of supply could be permanently or near-permanently lost. “Initial gains will be more dependent on logistics than production. Subsequent gains will depend on upstream and refinery recovery. A full resumption of production this year is unlikely,” ANZ said.
