Gotrade News - Oil prices slipped roughly 1% on Monday (23/02) as markets digested fresh developments in the US-Iran nuclear negotiations. Brent crude fell 87 cents to US$70.89 a barrel, while WTI dropped 85 cents to US$65.63 a barrel, according to CNA.
The pullback came after Iranian Foreign Minister Abbas Araghchi signaled strong prospects for a diplomatic breakthrough. According to Bloomberg, Araghchi said a win-win deal is within reach and that he plans to meet US special envoy Steve Witkoff in Geneva.
Key Takeaways
- A third round of US-Iran nuclear talks is set for Thursday in Geneva, and the outcome could reshape an estimated US$10-per-barrel risk premium baked into oil prices
- Trump's tariff hike from 10% to 15% on all US imports is adding fresh headwinds to global energy demand
- Goldman Sachs sees the oil market staying in surplus through 2026, raising its Q4 Brent forecast to US$60 a barrel
Oman's Foreign Minister Badr Albusaidi confirmed that the third round of talks will take place Thursday in Geneva. According to Reuters, a senior Iranian official indicated Tehran is ready to make concessions on its nuclear program in exchange for sanctions relief and recognition of its right to enrich uranium.
Trump's New Tariff Hike Piles On the Pressure
Beyond the diplomatic front, markets also reacted to Trump's latest tariff move on Saturday (22/02). Trump bumped a temporary tariff from 10% to 15% on all US imports after the Supreme Court struck down his earlier tariff program, according to CNA.
IG Markets analyst Tony Sycamore noted the tariff news triggered a wave of risk-off flows across markets. The impact showed up in gold prices, US equity futures, and crude oil alike.
The tariff decision effectively offset the military escalation fears that had pushed Brent and WTI up more than 5% the previous week. That said, the threat of military action remains a wildcard that hasn't fully left the market's radar.
Risk Premium and the Surplus Outlook
According to Vandana Hari of Vanda Insights, Brent currently carries at least a US$10-per-barrel Iran risk premium. As long as the threat of US strikes looms over diplomatic efforts and a naval armada remains parked in the Middle East, crude is unlikely to slide much further.
The Strait of Hormuz sits at the heart of this risk calculus as a critical chokepoint for global oil and LNG shipments. According to Bloomberg, Saudi Arabia, Iraq, and Kuwait all route their crude through the strait, with most cargoes headed to Asia.
Goldman Sachs projects the global oil market will remain in surplus through 2026, assuming no Iran-related supply disruption. The bank raised its Q4 2026 Brent forecast by US$6 to US$60 a barrel and WTI to US$56 a barrel, driven by lower OECD inventories.
However, Goldman Sachs analysts also flagged further downside risks. Potential sanctions relief for Iran and Russia could fast-track additional supply and knock US$5 to US$8 off Q4 2026 prices.
Haris Khurshid of Karobaar Capital urged traders to keep an eye on time spreads, diesel and gasoil inventories, and OPEC discipline. According to Bloomberg, if product markets tighten or the curve shifts into stronger backwardation, that is the signal things are getting real.
Brent's prompt spread has narrowed to 43 cents a barrel, down from over US$1 at the end of January. The tightening suggests that despite lingering geopolitical tensions, the market is starting to price in a more constructive diplomatic scenario.
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Reference:
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Bloomberg, Oil Drops as Traders Weigh Outlook for Iran Nuclear Agreement. Accessed on February 23, 2026
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CNA Asia, Oil drops as US and Iran prepare for further nuclear talks. Accessed on February 23, 2026
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