Oil drops to four-month low as Trump keeps Iran talks on track

Global oil prices settled at their lowest level in four months on Wednesday (July 1), after US President Donald Trump said the latest talks between the United States and Iran in Qatar had gone well, easing investor concern over possible supply disruption.

West Texas Intermediate (WTI) crude for August delivery fell 92 US cents, or 1.32%, to close at US$68.58 a barrel.

Brent crude for September delivery dropped US$1.38, or 1.89%, to settle at US$71.57 a barrel.

Analysts also cut their oil price forecasts for the first time since the war began.

Trump said the talks in Qatar had gone well and that Washington was developing a very good relationship with Tehran.

He also played down the prospect of a return to all-out conflict, saying: “I think they’ve come a long way.”

The United States and Iran concluded a round of indirect talks in Doha with no clear sign of progress towards a lasting peace deal.

Sources familiar with the discussions said negotiators spent two days focusing on maritime traffic through the Strait of Hormuz and the unfreezing of Iranian funds, two issues covered under the initial agreement announced two weeks earlier.

The talks were technical in nature, and the sources said Iran’s nuclear programme was not discussed.

In Washington, however, Trump said the two sides were making progress on possible limits to the programme, which was cited as the central reason for the war launched with Israel in February.

“The denuclearisation of Iran is moving along well,” he told reporters.

“They’ve had very good meetings, and we’ll see.”

US Vice President JD Vance said the nuclear issue would be addressed later.

“Obviously, we’re worried about the nuclear issue; we’re going to start talking about that,” he said.

Qatar’s Foreign Ministry said American and Iranian negotiators held separate meetings with Qatari and Pakistani mediators.

A ministry spokesperson said in a post on X that the Doha discussions had produced “positive progress” on issues related to the memorandum that halted the war in June and were “building on the outcomes” of a summit in Switzerland.

The next meeting is expected after the funeral processions for Iran’s late Supreme Leader Ayatollah Ali Khamenei, who is due to be buried on 9 July, according to Qatar’s Foreign Ministry.

Iran’s delegation was led by Deputy Foreign Minister Kazem Gharibabadi, who said the talks had concluded.

Neither side said whether they had narrowed their differences.

Trump’s son-in-law, Jared Kushner and top US envoy Steve Witkoff, who were dispatched to the region for what the White House had described as “high-level” talks, did not attend the sessions, according to a source who spoke on condition of anonymity.

A Wall Street Journal report also said Trump had decided to continue diplomatic efforts for now, despite US Defence Secretary Pete Hegseth and General Dan Caine, chairman of the Joint Chiefs of Staff, presenting options for renewed large-scale air strikes against Iran.

The report said the decision was not final, but Trump had told senior officials that new strikes could weaken diplomacy and reduce the chances of achieving his ultimate goal of ending Iran’s nuclear programme.

It also said Trump was prepared to let talks with Iran continue beyond an 18 August deadline to reach a nuclear agreement.

The Strait of Hormuz remains a central unresolved issue.

The initial deal calls on Iran and the United States to allow shipping to resume through the waterway, which handled one-fifth of global oil and liquefied natural gas trade before the war.

Although traffic has partly resumed, the status of the route remains unclear, and the two countries exchanged strikes last weekend after an Iranian attack on a cargo ship.

Two senior Iranian sources said Tehran was determined to win international recognition of its control over the strait, even by force if necessary.

Iran has repeatedly said it will begin assessing tolls on shipping in mid-August, after a toll-free period under the initial agreement expires.

Vance said oil flows through the shipping route had returned to pre-war levels.

Iran’s state media also reported that a foreign container ship had run aground in shallow waters outside the shipping route designated by Iranian authorities.

“Hormuz continues to reopen, but it’s patchy, unpredictable, and not fully transparent,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.

Several European countries have offered to help clear mines from the Strait of Hormuz, but German Defence Minister Boris Pistorius said he did not expect Germany to take part, citing Iran’s unwillingness to cooperate with other countries.

The US Energy Information Administration (EIA) said crude stocks fell by 3.7 million barrels last week, compared with analysts’ expectations for a 2.9 million-barrel decline.

Gasoline stocks dropped by 2.3 million barrels, more than the expected fall of 950,000 barrels, while distillate stocks, including heating oil and diesel, rose by 2.4 million barrels against expectations for a 700,000-barrel decline.

Reuters