WTI crude rises 0.4% to $68.80 as US-Iran talks loom

WTI crude edged up 0.4% to $68.80 a barrel in early trading as market participants adjusted positions ahead of the expected restart of US-Iran negotiations following the conclusion of funeral ceremonies for Iran's late Supreme Leader Ayatollah Ali Khamenei.

"Continued progress in talks could reinforce the recent downward pressure on prices as supply normalization advances," said Paolo Broccardo, chief executive officer at BankPro. "Conversely, any setback in negotiations could quickly reverse the move and revive upward momentum on crude."

The mild uptick comes as Iran concludes multi-day funeral ceremonies for Khamenei, who was killed in US and Israeli airstrikes on Feb. 28. Technical-level talks between Washington and Tehran are expected to resume as soon as July 11, with Islamabad emerging as the likely venue, according to diplomatic sources cited by Dawn. The negotiations aim to advance the framework established under the June 18 Islamabad Memorandum of Understanding, which gave both sides 60 days to reach a comprehensive agreement covering Iran's nuclear program, sanctions relief and maritime security.

The stakes extend beyond crude prices. Iran has signaled it intends to use its control over the Strait of Hormuz — through which a fifth of global oil and liquefied natural gas supplies transit — as its primary bargaining chip, with Tehran seeking to convert wartime leverage into permanent strategic advantage before addressing the nuclear question, according to regional officials and analysts cited by Reuters.

Hormuz leverage reshapes the negotiating calculus

Iranian officials have framed the strait as a non-negotiable asset. Parliament Speaker Mohammad Bagher Qalibaf described Hormuz as Iran's "greatest power tool" and said the country would "under no circumstances relinquish its rights" there, Reuters reported. The position reflects a strategic calculation that Tehran can afford to slow the pace of nuclear talks while locking in what it views as the war's dividends.

The 60-day clock toward a final deal, set by the June 18 MoU, has yet to formally begin. In that vacuum, Iran is setting the tempo. Tehran believes US President Donald Trump — constrained by domestic politics and wary of another confrontation before the November midterm elections — faces greater pressure to secure a deal than Iran does to make concessions, analysts said.

The last time Washington and Tehran engaged in sustained nuclear diplomacy, during the 2015 Joint Comprehensive Plan of Action negotiations, oil prices fell roughly 30% over the 18-month negotiating period as the market priced in the return of Iranian supply. A comparable scenario today would imply significant downside risk to crude if talks advance, though Iran's current insistence on Hormuz recognition as a precondition marks a departure from the earlier framework.

What happens next

The July 11 technical talks, if confirmed, would focus on Iran's nuclear program, sanctions relief and frozen Iranian assets abroad, according to diplomatic sources. A separate round of high-level direct talks is expected in Doha during the third week of July. US President Trump described recent indirect discussions in Doha as "very good," while Iranian officials said the two sides had reached an understanding on the partial release of billions of dollars in frozen assets — a claim US officials disputed.

For oil markets, the direction hinges on whether the talks produce tangible progress or collapse into recrimination. A successful outcome could accelerate supply normalization and reinforce the recent downward drift in crude prices. A breakdown would revive geopolitical risk premiums and provide upside momentum, Broccardo said.

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