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Oil prices stabilized on Monday following a tumultuous week, as diplomatic progress between the United States and Iran helped ease supply concerns while India’s decision to reduce Russian oil purchases provided support to the market. Brent crude oil futures rose 17 cents to $68.22 a barrel, while U.S. West Texas Intermediate crude gained 18 cents to reach $63.73 by mid-morning trading in London, according to market data.
The modest gains came after both Washington and Tehran pledged to continue indirect talks, which both sides characterized as positive. These discussions helped calm fears that escalating tensions might lead to military conflict in the Middle East, a region critical to global energy supplies.
Middle East Tensions Impact Oil Prices
The strategic importance of the region cannot be overstated, as approximately one-fifth of the world’s oil consumption passes through the Strait of Hormuz between Oman and Iran. Any disruption to this vital shipping lane could send energy prices soaring and create significant supply challenges for global markets.
However, tensions remain elevated despite the diplomatic overtures. Iran’s foreign minister warned that the country would strike U.S. military bases in the Middle East if attacked by American forces, highlighting the fragile nature of the current situation.
According to Bjarne Schieldrop, an analyst at SEB, “The Iranian risk premium cannot be fully defused as long as U.S. warships are located where they are.” This ongoing military presence continues to keep traders on edge about potential supply disruptions.
Russian Oil Sanctions Add Market Complexity
Meanwhile, developments in the Russian oil market are adding another layer of complexity to crude oil prices. The European Commission proposed sweeping new sanctions on Friday that would ban any services supporting Russia’s seaborne crude oil exports, intensifying Western efforts to curb Moscow’s revenue from energy sales that fund its war in Ukraine.
Additionally, refiners in India, previously the largest buyer of Russia’s seaborne crude, are now avoiding purchases for delivery in April. Refining and trade sources indicate that Indian companies are expected to maintain this distance from Russian oil trades for an extended period, potentially as part of efforts to secure a trade agreement with Washington.
Sparta oil market analysts noted that if India fully stopped Russian oil purchases, “this would be a sustained bullish development for the physical crude market.” Such a shift would remove a significant buyer from the discounted Russian oil market and potentially redirect demand to other suppliers.
Recent Market Performance and Outlook
The current stability in oil prices follows a week of significant declines. Brent crude fell more than 3 percent while WTI dropped over 2 percent last week, marking their first weekly decline in seven weeks. The downturn was driven by easing geopolitical tensions and a broader market selloff led by equity markets.
In contrast to recent volatility, Monday’s trading showed more measured movements as investors weighed multiple competing factors. The balance between diplomatic progress on Iran and increased pressure on Russian oil exports appears to be creating a relatively stable price environment in the near term.
Market participants continue to monitor developments in U.S.-Iran negotiations and India’s purchasing decisions, which will likely shape oil price movements in the coming weeks. The outcome of proposed European sanctions on Russian oil services and any potential trade agreement between India and the United States remain key uncertainties for global energy markets.
