Oil Prices Crash to Pre-War Lows as US-Iran Peace Talks Show Real Progress

Brent crude dips under $71 per barrel as diplomatic momentum builds around a lasting ceasefire deal between the US, Israel, and Iran.

Oil prices have dropped to their lowest point since the US-Israel war on Iran began. Hope is growing that a permanent peace deal may finally be within reach.

Brent crude slipped more than 1 percent on Thursday. It fell below $71 a barrel, pulling it back to where prices stood before the war broke out.

Brent futures for August delivery were trading at $70.82 per barrel at 04:30 GMT. That marks the lowest level recorded since February 27.

This latest drop puts Brent prices more than 38 percent below their wartime peak. Oil had hit over $126 a barrel on April 30 its highest point since fighting began.

The decline followed a significant diplomatic signal from Qatar. The Gulf nation, acting as a key mediator between Washington and Tehran, announced that US and Iranian negotiators had made “positive progress” in indirect talks. These discussions focus on resolving outstanding issues from their memorandum of understanding (MoU) on ending the war.

US President Donald Trump added fuel to the optimism on Wednesday. He said the “denuclearisation of Iran is moving along well.”

Vandana Hari, founder of Singapore-based oil analysis firm Vanda Insights, pointed to two key drivers. She cited a steady rise in oil flows leaving the Gulf. She also noted what she called “cautiously optimistic geopolitical sentiment” pushing prices down.

“Several key issues in the MoU remain unresolved, but the two sides appear to have backed off confrontation on the issue of the interim Hormuz transit regime, at least for the time being,” Hari told Al Jazeera.

She also predicted oil prices will keep sliding. “I expect crude to continue grinding lower until the backlog of stranded barrels has cleared, and prices could even swing into oversold territory,” she said.

“The real test of normalisation of Persian Gulf supply will come after that, necessitating fresh supply-demand balance recalibration,” she added.

All eyes are also on the Strait of Hormuz. In peacetime, it carries one-fifth of the world’s oil and liquefied natural gas trade. The waterway showed early signs of recovery this week. This came after sharp disruptions triggered by attacks on two commercial vessels one on Thursday and one on Saturday.

Data from MarineTraffic shows at least 40 vessels crossed the strait on Tuesday. That number is up from 27 on Monday and just 22 on Sunday.

Yet maritime traffic is still far below its pre-war norm of around 130 daily crossings. Safety worries continue to keep many ships away.

Iran signed the MoU with the US on June 17. Under the deal, Iran agreed to use its “best efforts” to ensure safe passage for vessels. But Tehran has since claimed the sole right to control all movement through the strait.

At least 49 attacks on commercial ships have been recorded in the strait since fighting began. MarineTraffic data shows most attacks were either claimed by Tehran or attributed to Iranian forces.