International crude oil prices extended decline to a second session on Friday as planned talks between Iran and the United States later today eased the immediate risk of military conflict and supply disruptions.
Global benchmark Brent crude traded near $67 a barrel after falling 2.8% on Thursday, while US benchmark West Texas Intermediate slipped below $63. Oil futures initially slumped sharply after US President Donald Trump said Iran was engaged in negotiations, but prices later recovered some ground after Saudi Arabia cut prices for Asian buyers by less than expected, signaling confidence in demand.
Uncertainty remains over the scope of the negotiations, with Tehran seeking to confine talks to its nuclear program, while the Trump administration wants to broaden the agenda to include Iran's ballistic-missile program, support for regional militant groups and human rights issues.
Crude prices had rallied over the previous two sessions as rising Middle East tensions lifted the geopolitical risk premium. Prices shot up following the US downing of an Iranian drone near an American aircraft carrier in the Arabian Sea on Tuesday. The incident unsettled energy markets, though President Donald Trump emphasized that diplomatic channels remain open.
Oil is now on track for its first weekly loss since mid-December, trimming some of the risk premium that's formed because of the heightened tensions in the Middle East, which provides about a third of the world's crude. Nevertheless, varying positions over the parameters of US-Iran negotiations make it unclear whether the two sides can realistically bridge major differences — meaning the talks will likely continue to overshadow physical oversupply.
(With inputs from Bloomberg)
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