Brent crude futures fell more than one percent on Monday, trading around 67.20 dollars per barrel, extending last week’s decline as easing geopolitical tensions reduced immediate concerns over global oil supply disruptions. The benchmark declined 1.13 percent to close at 62.83 dollars per barrel, marking the continuation of selling pressure that began last week.
Diplomatic talks between the United States and Iran in Oman helped calm markets, with both sides describing the indirect negotiations as constructive and agreeing to continue discussions this week. United States President Donald Trump called the talks “very good,” while Iranian Foreign Minister Abbas Araghchi termed them “a good start,” reducing fears of military confrontation that could disrupt crude flows from the Middle East.
The region accounts for roughly one third of global crude output, making any escalation a significant risk to supply. Trump has repeatedly threatened military action to compel Iran to reach a nuclear agreement, deploying the aircraft carrier USS Abraham Lincoln and additional warships to waters near Iran. Despite the diplomatic progress, underlying tensions remain unresolved, with Washington demanding Iran abandon its nuclear enrichment programme while Tehran insists uranium enrichment will continue.
Beyond geopolitical developments, traders are monitoring potential shifts in global oil trade flows following Trump’s announcement last week that India had agreed to stop purchasing Russian crude as part of a trade arrangement. Indian authorities have not formally confirmed the commitment, emphasizing instead that energy security remains the government’s top priority.
India currently imports approximately 1.5 million barrels of Russian oil daily, representing more than one third of its total crude imports. Analysts remain sceptical that New Delhi will completely halt purchases from Russia, noting the significant economic advantages India has derived from buying discounted Russian crude since Western nations imposed sanctions on Moscow following the February 2022 invasion of Ukraine.
Russian oil has traded at a discount of roughly 16 dollars per barrel compared to Organisation of the Petroleum Exporting Countries or United States crude, making it economically challenging for India to abandon the source entirely. Market observers suggest any transition away from Russian supplies would require substantial time and infrastructure investment to accommodate alternative sources such as Venezuelan or American crude.
Traders are awaiting reports from OPEC+ and the International Energy Agency later this week for clearer insight into supply and demand conditions. The reports are expected to provide updated forecasts on global inventory levels and production trends, which will help shape market expectations for the coming months.
Brent has gained 5.27 percent over the past month based on contract for difference trading that tracks the benchmark market. However, the futures contract remains 11.38 percent lower compared to a year ago, reflecting sustained pressure on prices as global production has exceeded consumption.
Saudi Arabia’s decision to cut official selling prices for its main crude grade to Asia to the lowest level since late 2020 has reinforced expectations of abundant supply. The kingdom’s pricing adjustment, while smaller than some market participants anticipated, highlights ample availability even as it suggests confidence in sustained demand from Asian buyers.
West Texas Intermediate crude, the United States benchmark, traded around 62.99 dollars per barrel on Monday, down 0.88 percent. The United States Energy Information Administration forecasts Brent will average 56 dollars per barrel in 2026, representing a 19 percent decline from 2025 levels, as global oil production is expected to exceed demand and cause inventories to rise.
Oil prices continue to balance multiple crosscurrents, including evolving diplomatic developments in the Middle East, potential shifts in major trading relationships, and fundamental supply and demand dynamics that currently favour lower prices. Market participants remain cautious, recognizing that any significant disruption to supply channels or unexpected demand growth could quickly reverse recent declines.
