What is happening with oil?
Brent crude narrowed its losses during yesterday’s session, despite an earlier move of approximately -10%, an exceptionally rare occurrence in this market. The sharp price drop followed statements by Donald Trump suggesting that negotiations for a deal with Iran are underway and an agreement is expected shortly. Trump called off the planned strike on energy infrastructure, granting Iran a 5-day window to finalize talks. Although Tehran officially denied that any negotiations are taking place, the current dynamic is beginning to mirror last year’s trade negotiations with China.
Are peace negotiations actually taking place?
While Donald Trump suspended American strikes on key energy facilities, Israeli-led airstrikes continued overnight, focusing primarily on gas-related infrastructure. Iran responded with retaliatory attacks targeting Israel and other regional states, including Bahrain and the UAE. The Wall Street Journal reports that Persian Gulf nations are considering deeper involvement in the conflict. Saudi Arabia has granted the U.S. access to its airbases for operations and is weighing the direct use of its own military forces. Meanwhile, the UAE is directing its efforts toward striking Iran’s financial and economic foundations.
Despite Iran’s official rejection of the dialogue narrative, media reports suggest that negotiations are being conducted through “back channels,” with Pakistan offering to act as a mediator. There is a risk that Donald Trump is overly optimistic regarding signals of de-escalation, which may only be coming from one Iranian faction, while hardline elements of the regime remain opposed to peace. The situation recalls events from 2025, when Trump announced a breakthrough with China after both sides raised tariffs above 100%. Despite initial denials from Beijing, an agreement reducing rates to 30% was signed two weeks later. Currently, Iran demands a full lifting of sanctions, financial reparations, and a U.S. withdrawal from the region, while Washington insists on the total suspension of Iran’s nuclear program.
Market Situation
Brent crude is currently trading around 100 USD per barrel on the May contract, while the April contract remains significantly above this level. Following yesterday’s halt in the sell-off, today’s gains remain limited. Given the 5-day deadline set by the U.S., volatility may temporarily subside, though it must be noted that Israel has not withdrawn from military operations against Iran.
On the technical front, key support at 95 USD per barrel remains intact, coinciding with the 38.2% Fibonacci retracement. This level has previously served as a site for significant price reactions. For now, the uptrend line—drawn from the lows of late February and January 10—remains unbroken.
The forward curve remains in pronounced backwardation, and calendar spreads through the end of the year remain high (though lower than the extreme levels seen in 2022). A reduction in calendar spreads of approximately 1–2 dollars would signal a genuine peak and the potential for a deeper decline in the coming weeks. Notably, forward prices for early 2027 are holding above 80 USD per barrel, significantly higher than levels seen before the conflict began.
Source: Bloomberg Finance LP
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