Oil prices gained on Friday morning despite ongoing de-escalation of tensions between Iran and the US, with April Brent oil futures trading at $67.93, up 0.56%, and March WTI crude futures at $63.67, up 0.60% as of 9:56 am. According to The Hindu BusinessLine, MCX crude oil futures were trading at ₹5,755 during initial hour of trading on Friday, up 0.16% from previous close of ₹5,746, while March futures were at ₹5,752, up 0.26% from ₹5,737. West Texas Intermediate traded above $63 a barrel in a choppy session as investors assessed the status of nuclear talks between the US and Iran. Oil prices had retreated on Thursday as markets responded to confirmation of US-Iran talks resuming in Oman, with Brent crude falling 1.4% to $68.47 per barrel and US WTI declining 1.4% to $64.23. Mukesh Sahdev, CEO of energy consultancy XAnalysts, noted that "the oil price has erased part of the geopolitical risk premium on the news of US-Iran talks in Oman on Friday," as reported by The Economic Times. The latest price movements build on Tuesday's gains when oil settled 1.55% higher amid ongoing geopolitical uncertainties, with the market continuing to price in some risk premium due to uncertainty about how US-Iran negotiations will play out.
The Trump administration has confirmed that US-Iran talks are still scheduled for Friday in Oman, with Iranian Foreign Minister Abbas Araghchi confirming in a social media post that talks with the US will be held in Oman on Friday, clarifying the location of the encounter. A White House official confirmed that the two countries still plan to engage on a potential nuclear deal that was abandoned by Washington in 2017. According to Bloomberg, Iranian foreign minister Abbas Araghchi said the talks had a "good start," even as the Wall Street Journal reported that Tehran stood by its refusal to end enrichment of nuclear fuel, a major sticking point for the US. The two sides remain wide apart on what the talks should include, with Iran open to discussing its nuclear programme, including uranium enrichment, with Western countries, while the US also wants to include Iran's ballistic missiles, its support for armed proxy groups around the Middle East and its treatment of its own people. The move comes as Washington builds up military forces in the Gulf, with President Donald Trump warning that failure to reach a deal could lead to "bad things," even as negotiations continue behind closed doors.
On the supply front, oil output from key producers such as Venezuela and Iran had normalised in recent months, with the latter's production reportedly touching pre-sanctions levels, according to Emkay Wealth Management. As reported by Reuters, a large portion of this output had been directed towards Asian markets, particularly China. However, fresh political developments and evolving geopolitical dynamics have reintroduced uncertainty around the continuity and routing of these supplies to global markets, according to Emkay Wealth Management. Reuters notes that OPEC members Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq export most of their crude via the Strait of Hormuz, mainly to Asia, with Iran being the third-biggest OPEC crude producer in 2025 according to U.S. Energy Information Administration data. India imports about 88% of its crude oil, which is converted into fuels like petrol and diesel, making the country particularly vulnerable to Middle East supply disruptions. About a fifth of the world's total oil consumption passes through the Strait of Hormuz which lies between Oman and Iran, with other OPEC members, Saudi Arabia, the United Arab Emirates, Kuwait and Iraq, exporting most of their crude via the strait, as well as Iran itself.
In a significant development, US President Donald Trump has said he retains the right to 'militarily secure and reinforce' the American presence in Diego Garcia, as reported by The Hindu BusinessLine. In a post on Truth Social, Trump said he had very productive discussions with UK Prime Minister Keir Starmer about the Island of Diego Garcia, terming it as the site of a major US military base strategically situated in the middle of the Indian Ocean. "We have the most powerful Military in the World. Our Military Operations, over the course of the last year, were successful because of the strength of our war fighters, modern capability of our equipment and, very importantly," Trump stated. "I understand that the deal Prime Minister Starmer has made, according to many, the best he could make. However, if the lease deal, sometime in the future, ever falls apart, or anyone threatens or endangers US operations and forces at our Base, I retain the right to Militarily secure and reinforce the American presence in Diego Garcia." Trump emphasized that "I will never allow our presence on a Base as important as this to ever be undermined or threatened by fake claims or environmental nonsense."
Emkay Wealth Management believes that the global crude oil prices may witness a marginal uptick in the near term amid ongoing geopolitical and supply-side uncertainties, but the broader outlook for Brent crude remains largely range-bound, with limited scope for a sustained rally. According to Emkay Wealth Management, "While geopolitical developments could support oil prices in the very short term, the underlying fundamentals suggest that any rally will be limited. With demand growth remaining muted and global inventories expected to rise further, Brent crude is likely to stay range-bound over the medium term." Joseph Thomas, Head of Research at Emkay Wealth Management, noted that "Energy companies and market participants will need to navigate this phase with capital discipline and a focus on operational efficiency rather than relying on price-led growth." On the technical front, Rahul Kalantri, VP Commodities at Mehta Equities, said that crude oil prices are likely to remain volatile in today's session, with crude oil having support at $62.55-61.00 and resistance at $64.40-65.10. Capital Economics analysts noted that "Escalating geopolitical tensions between the U.S. and Iran have contributed to higher oil prices, but we think that geopolitical fears will give way to weak fundamentals," pointing to a recovery in Kazakhstan's oil output which will help push oil prices lower towards $50 per barrel by end-2026**.
Additional pressure on oil prices came from the dollar index rising 0.25% to 97.65, which measures the greenback against a basket of currencies including the yen and the euro. As reported by Reuters, a stronger dollar hurts demand for dollar-denominated crude from foreign buyers, providing another headwind for oil prices despite the ongoing geopolitical tensions. This currency strength offset some of the support that oil prices had received from the escalating US-Iran tensions and military buildup in the Middle East. According to The Economic Times, strength in the U.S. dollar and volatility in precious metals also weighed on commodities and risk sentiment more broadly on Thursday, analysts said. However, futures in New York are on track for their first weekly retreat since mid-December as the US-Iran talks helped allay concerns over a broader conflict in the region, as reported by Bloomberg. Futures also extended gains after data showed US consumer sentiment unexpectedly improved to the highest in six months, allaying some concerns over an economic slowdown in the country that could lead to a potential slowdown in oil demand.