Oil markets were trading marginally lower on Tuesday, maintaining levels just beneath an almost seven-month peak as traders parsed the outlook for renewed U.S.-Iran nuclear negotiations amid elevated regional tensions and evaluated shifting signals on U.S. trade policy.
Brent crude futures were down 9 cents, or 0.1%, at $71.40 a barrel by 0120 GMT, after a volatile session on Monday that saw the contract touch $72.50 - its strongest level since July 31 - while swinging between gains and losses in excess of 1%.
U.S. crude futures fell 11 cents, or 0.2%, to $66.20 a barrel. That followed a climb to $67.28 in the prior session, a level not seen since August 4.
Market participants remain sensitive to developments around the U.S.-Iran diplomatic track. "Crude oil markets remained on edge as U.S.-Iran talks resume this week," Daniel Hynes, an analyst at ANZ, wrote in a research note. He added that "renewed trade tensions also weighed on sentiment."
Officials expect a third round of nuclear negotiations between Iran and the United States on Thursday in Geneva, Oman’s Foreign Minister Badr Albusaidi said on Sunday. The United States wants Iran to abandon its nuclear programme, while Iran has firmly rejected such demands and denied it is seeking to build an atomic weapon.
Adding to unease in the region, the U.S. State Department is withdrawing non-essential government personnel and their families from the U.S. embassy in Beirut, a senior State Department official said on Monday, citing growing concerns about the risk of a military conflict with Iran.
U.S. President Donald Trump wrote in a social media post on Monday that it will be a "very bad day" for Iran if it does not make a deal.
Market strategists note that crude remains at the upper end of a trading corridor that has dominated recent months. Tony Sycamore, an IG market analyst, observed that "crude oil remains at the very top of the $55–$66.50 trading range that has defined the past six months." He said a sustained move above that top would pave the way for further gains toward $70.00–$72.00, while any signs of de-escalation could see prices retrace toward $61.00.
Beyond geopolitics, shifts in U.S. trade policy are also injecting uncertainty into markets. President Trump cautioned countries against retreating from recently negotiated trade agreements with the United States after the Supreme Court struck down his emergency tariffs, saying that he would impose much higher duties under different trade laws if partners back away.
On Saturday, President Trump said he would raise a temporary tariff from 10% to 15% on U.S. imports from all countries, noting that 15% is the maximum level permitted under the law.
In a separate development relevant to oil flows, a Ukrainian security official said on Monday that Ukrainian drones struck a Russian pumping station that supplies the Druzhba oil pipeline, which carries Moscow’s crude to parts of Eastern Europe.
Traders continue to watch both the diplomatic track and trade policy pronouncements closely, as either set of developments could influence physical flows, risk premiums and near-term price dynamics in oil markets.