Brent crude oil futures dipped below $66 per barrel on Tuesday, extending the steepest decline in over six months as geopolitical risk premiums retreated and supply fundamentals remained unchanged. The global benchmark pulled back sharply from recent multi‑month highs on signs that key tensions threatening Middle East supply could be easing.
Market sentiment was chiefly influenced by renewed diplomatic activity between the United States and Iran. Both sides announced that nuclear negotiations are set to resume on Friday, a development that has eased fears of an imminent regional conflict and the threat of supply disruptions through the strategic Strait of Hormuz. Analysts say the prospect of diplomacy replacing confrontation has already stripped a significant risk premium from crude prices.
At the same time, President Trump said he would cut tariffs on Indian goods from 25% to 18% after Prime Minister Narendra Modi agreed to halt purchases of Russian oil and expand purchases from other sources, including potentially U.S. supply. That move helped diminish broader trade‑related uncertainties that have also weighed on energy markets.
On the supply side, OPEC+ reaffirmed plans to hold production steady in March following its recent decision to pause output hikes amid weak seasonal demand. That stance, while supportive of existing price levels, offered little fresh catalyst to counter the pullback driven by reduced geopolitical risk.
The selloff in oil prices has been mirrored by broader commodity weakness, with metals and other raw materials also retreating as investors reassess risk positions. A firmer U.S. dollar, bolstered by expectations around tighter monetary policy, has further pressured dollar‑priced commodities, including crude.
Market watchers warn that oil could remain volatile in the near term as traders balance ongoing diplomatic developments, supply signals from OPEC+, and macroeconomic factors such as currency strength and demand prospects.
