Oil Prices Tumble on Announced U.S.-Iran Talks


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil and product futures plunged around 5% Monday (2/2) 
morning after U.S. President Donald Trump and Iranian officials announced talks 
between Washington and Tehran.

   WTI futures for March delivery plummeted $3.31 to $61.90 bbl, and ICE Brent 
for April delivery fell $3.33 to $65.99 bbl.

   Downstream, front-month RBOB futures were down 4.2%, or $0.0812, to $1.8610 
gallon, and ULSD for March delivery plunged $0.1415 to $2.3915 gallon, down 
5.6%.

   The U.S. dollar index strengthened by 0.351 points to 97.210 against a 
basket of foreign currencies.

   Growing geopolitical risks centered around Iran have been pushing oil prices 
higher throughout January, peaking at a four-month high last Thursday on fears 
of an imminent U.S. attack. On Saturday though, Trump said that Washington and 
Tehran are "seriously talking". Iranian officials over the weekend struck a 
similar tone, announcing that negotiations were being arranged.

   Lessened supply risks and a return of previously shut-in production in the 
U.S. and Kazakhstan had market participants refocus on bearish fundamentals. 
Most analysts expect crude oil to be in oversupply throughout 2026, forecasting 
a large overhang particularly in the first quarter amid seasonal refiner 
maintenance.

   A broader commodity sell-off, supported by the U.S. dollar recovering from 
recent lows, further pressured oil prices. The U.S. dollar index remained some 
two points below the mid-January high, however. Oil prices, meanwhile, were 
still up more than 7% from the beginning of the year after today's plunge.

   Several manufacturing PMIs set to be released today will provide further 
insight into oil demand growth, which is expected to lag global supply 
additions this year. The Institute for Supply Management's U.S. manufacturing 
PMI for December showed the decline in U.S. manufacturing activity speeding up 
last month. The PMI for January is scheduled for 10:00 a.m. ET release today.




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