Oil falls 2% as US-Iran Doha talks raise supply hopes

Oil prices fell Tuesday as investors weighed the outcome of potential US-Iran talks in Doha, with weekend missile exchanges from both sides testing an interim ceasefire to the four-month-old war.

Brent crude declined as much as 2 percent in early trading, with traders pricing in the possibility that a diplomatic breakthrough could ease supply disruptions through the Strait of Hormuz. The drop extended a broader pullback from war-time highs, with crude trading near $70 a barrel after peaking above $90 following the Feb. 28 outbreak of hostilities.

"The market is pricing a binary outcome — either talks succeed and supply normalizes, or they fail and we see another spike," said Helima Croft, head of commodity strategy at RBC Capital Markets. "The missile exchanges over the weekend remind everyone how fragile this ceasefire really is."

US President Donald Trump said Monday that the next meeting with Iran would take place in Doha on Tuesday, with his top envoys Steve Witkoff and Jared Kushner attending what the White House described as "high-level" talks. Technical-level negotiations are expected on the sidelines. Iranian officials later contradicted the claim, with senior negotiator Kazem Gharibabadi saying reports of technical talks in Doha were "not confirmed."

The conflicting signals underscore the fragility of the interim accord signed this month, which had briefly boosted crude flows through the Strait of Hormuz to their highest level since the war began. Vessel crossings reached 70 on Wednesday after the memorandum of understanding, before falling sharply over the weekend after a vessel was struck while transiting the waterway Saturday. Only 12 commodity vessels crossed Sunday, according to maritime tracking firm Kpler, down from 29 the previous day.

Strait of Hormuz remains the flashpoint

The waterway, through which about a fifth of the world's oil passes, has become the central theater of the conflict. Iran separately met with Oman on Monday for what Gharibabadi called the first meeting of a joint committee on the strait's management, based on the MOU signed this month by Tehran and Washington.

Four tankers and a container ship used the southern Omani corridor to enter the Gulf on Sunday, escorted by US Navy vessels, according to HFI Research. No vessels used that corridor to exit the Gulf that day, data from Kpler showed, as the evacuation of seafarers remained suspended after a UN-led operation was halted Thursday.

Iranian President Masoud Pezeshkian said Monday that $6 billion in frozen Iranian assets would be released by Qatar as part of the deal, calling it "a great victory for the Iranian people." US officials have said no frozen assets have been released, and Qatar has not acknowledged any such transfer.

What happens next

If the Doha talks produce a framework for a final accord, oil prices could decline further as supply risk premiums unwind. A failure, or renewed hostilities, would likely reverse the recent pullback and push crude back toward war-time highs. The conflicting signals from Tehran and Washington suggest the path to a lasting agreement remains uncertain, with both sides continuing military operations even as they pursue diplomacy.

This article is for informational purposes only and does not constitute investment advice.