Oil prices slid about 4% on Monday, February 2, after U.S. President Donald Trump said over the weekend that Iran was seriously talking” with Washington. The comments eased fears of an escalation involving the OPEC member, after earlier concerns over a possible military strike had pushed prices to multi-month highs.
Brent crude futures fell $2.81, or 4.1%, to $66.51 a barrel, while US West Texas Intermediate dropped $2.70, or 4.1%, to $62.51 a barrel.
The declines marked a sharp pullback from the previous session, when Brent hit a six-month high, and WTI hovered near its strongest level since late September, driven by rising US-Iran tensions.
What’s driving crude oil prices lower?
On Saturday, Trump said that Iran was ‘engaged in serious talks’, coming just hours after Tehran’s top security official, Ali Larijani, said preparations for negotiations were in progress.
Trump’s remarks, coupled with reports that Iran’s Revolutionary Guards’ naval forces do not intend to conduct live-fire drills in the Strait of Hormuz, also signal a thaw in tensions between the US and Iran.
Meanwhile, OPEC decided at its meeting on Sunday to maintain oil production levels for March. The group had earlier paused additional planned output hikes for January through March 2026 in November, citing seasonally softer demand.
Meanwhile, the US President’s nomination of Kevin Warsh as the Fed Chairman pushed the US dollar higher, pressuring the crude oil prices further.
“Crude oil prices remained highly volatile and slipped from their highs on Friday after Kevin Warsh was nominated as the next Fed Chairman. The nomination boosted the U.S. dollar and bond yields, which weighed on oil prices. Weak sentiment and selling pressure in global markets also dragged crude lower. Still, supply worries linked to U.S.-Iran tensions and severe winter weather in the U.S. may support crude prices on dips,” said Rahul Kalantri, VP Commodities, Mehta Equities.
Crude oil prices outlook
Kalantri expects crude oil prices to remain volatile in today’s session.
“Crude oil is having support at $62.55-61.00, and resistance is at $64.40-65.10 in today’s session. In INR crude oil has support at Rs5,860,-5,710, while resistance is at Rs6,080-6,165,” he added.
Meanwhile, Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities, believes that crude oil prices on MCX have corrected from around ₹6,100 to ₹5,700, as risk-off sentiment grips global financial markets. The move has been reinforced by a firmer US dollar and reports that any immediate US attack on Iran has been delayed.
“For the near term, we expect MCX crude oil to trade in a broad consolidation range of ₹5,600–5,900, as markets balance macro risk-off forces against lingering geopolitical uncertainty,” Banerjee added.
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