US, Iran Tensions Puts Focus on Oil Output, Straight of Hormuz

Bob McNally, founder and president of Rapidan Energy Group, said that oil prices could shoot up to over $100 a barrel if Iran decides to close the straight of Hormuz. McNally said that if Iran makes the straight unsafe for a prolonged period of time, the US strategic petroleum reserve would not be able to offset the loss.

The US and Iran will continue nuclear talks next week after making “significant progress” in Switzerland, mediator Oman said, easing concerns about the potential for imminent military action by Washington.

Negotiations will resume at a technical level in Vienna after an initial consultation period, Oman’s Foreign Minister Badr Albusaidi said Thursday in a post on X. Oil pared gains as the threat of a new Middle East war faded.

With days to go until President Donald Trump’s deadline to reach an agreement, the two countries started their third round of Omani-mediated discussions in Geneva on Thursday morning. Trump has threatened military action against Iran unless its leaders agree to an accord, sparking fears of a conflict embroiling Gulf Arab oil producers and Israel.

The US team was led by Middle East envoy Steve Witkoff and Trump’s son-in-law Jared Kushner. Iran Foreign Minister Abbas Araghchi is heading the talks for the Islamic Republic.

Iranian state media said parts of the talks were conducted directly, suggesting the lead delegates met instead of dealing only via Omani officials. Iran stated it won’t allow any of its highly enriched uranium to be moved out the country, Press TV said, citing Esmail Baghaei, a spokesman for Iran’s Ministry of Foreign Affairs.

US officials are yet to comment publicly, though have previously signaled Iran would have to send such stocks of uranium to another nation or dilute them.  Oil swung as traders parsed competing headlines on the status of negotiations between the US and Iran.

West Texas Intermediate inched down 0.3% to settle above $65 a barrel, while Brent ended the day below $71, as the US and Iran wrapped up a third round of nuclear talks in Geneva, just days ahead of President Donald Trump’s deadline to strike a deal. Oman, a mediator in the discussions, said that talks are set to continue next week in Vienna at a “technical level,” allaying fears of imminent US military action.

Adding to a wave of bearish momentum just ahead of settlement, Axios reported that a US official described the conversations as “positive,” a sign of cautious optimism that Iranian Foreign Minister Abbas Araghchi’s echoed in remarks on state television.

Prices had gained earlier in the session after Iran’s state media reported that Tehran won’t allow enriched uranium to leave the country.  As tensions simmer in the Middle East, Saudi Arabia is on course to export the most crude in almost three years this month, while Iran has been rapidly filling up tankers in recent days. Combined flows from Iraq, Kuwait and the United Arab Emirates are also higher.

The market will be keeping a close eye on the outcome of a scheduled OPEC+ meeting on Sunday set to decide supply policy for April. Some delegates expect a modest production increase, but one official said the outlook was unclear as conflict risks between the US and Iran cloud the outlook.

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