Crude oil prices reversed early session gains on Thursday as market participants adjusted positions ahead of high-level diplomatic talks between the United States and Iran scheduled for Sunday.
The expected negotiations have tempered geopolitical tensions in the Middle East, leading to a measured pullback in global oil benchmarks.
Brent crude oil, against which Nigerian oil is priced, fell by $0.49 or 0.7% to settle at $69.28 per barrel as of 07:30 a.m. in Nigeria while West Texas Intermediate (WTI) lost $0.41 or 0.6% to close at $67.74 per barrel.
The retracement follows a sharp rally on Wednesday that saw both contracts rise more than 4%, marking their highest levels since early April.
The price decline reflects a cautious market response to evolving geopolitical developments. U.S. President Donald Trump confirmed the movement of personnel from the Middle East due to heightened security risks, describing the region as “a dangerous place,” while reaffirming the U.S. position against a nuclear-armed Iran.
Despite the rhetoric, analysts suggest the absence of a specific, imminent threat from Iran may have prompted traders to scale back risk premiums.
“Some of the surge in oil prices that took Brent above $70 per barrel was overdone,” said Vivek Dhar, Director of Mining and Energy Commodities Research at Commonwealth Bank of Australia. “A pullback makes sense, but a geopolitical premium that keeps Brent above $65 per barrel will likely persist until further clarity on U.S.–Iran nuclear talks is revealed.”
The United States is reportedly preparing a partial evacuation of diplomatic personnel in Iraq and Bahrain, with military dependents granted permission to leave due to increasing regional risks. Iraq, a key OPEC member and the organization’s second-largest producer, remains a critical component of global supply dynamics.
Diplomatic channels are expected to intensify over the weekend, with U.S. Special Envoy Steve Witkoff scheduled to meet Iranian Foreign Minister Abbas Araghchi in Oman.
The focus of the discussions will center on Iran’s nuclear enrichment activities and the terms of a potential new framework agreement.
Tensions remain elevated. Iran’s Minister of Defense, Aziz Nasirzadeh, stated that Iran would respond militarily to any U.S.-initiated conflict, including direct strikes on American bases in the region if talks collapse.
President Trump has repeatedly warned of potential military action should negotiations fail.
Meanwhile, U.S. crude stockpiles declined by 3.6 million barrels last week to 432.4 million barrels, according to the Energy Information Administration (EIA). The drawdown exceeded analyst expectations of a 2 million-barrel drop, indicating steady demand despite geopolitical uncertainty.
However, the inventory data was largely overshadowed by broader macro concerns and technical price movements. Market analysts also pointed to Brent’s encounter with key resistance levels during Wednesday’s rally, which contributed to Thursday’s pullback as traders took profit ahead of weekend event risk.
Kelvin Wong, Senior Market Analyst at OANDA, said, “Prices weakened after hitting critical resistance, and there’s clear positioning ahead of the upcoming talks. While risk remains, the market is waiting for clarity.”
Despite the correction, sentiment in the oil market remains highly sensitive to diplomatic outcomes. Should Sunday’s meeting result in de-escalation or the possibility of a deal, further downside in prices could follow. Conversely, failure to reach a consensus may reintroduce volatility and restore a geopolitical premium to crude markets.
In the interim, Brent continues to hold above key support levels, with traders monitoring developments across both diplomatic and supply fundamentals.
As the market awaits further direction, crude prices remain tethered to Middle East dynamics, U.S. foreign policy, and the evolving balance between supply constraints and geopolitical disruption.
