Oil falls on possible US-Iran de-escalation, firm dollar

Published
0
Cabimas, Venezuela, January 26, 2026 — Reuters/File
Cabimas, Venezuela, January 26, 2026 — Reuters/File

Oil prices fell on Tuesday, easing for a second day, as market participants weighed the possibility of a de-escalation in US-Iran tensions, while a firmer dollar placed greater downside pressure on prices.

Brent crude futures fell 34 cents, or 0.5 per cent, to $65.96 per barrel by 06:23 GMT, while US West Texas Intermediate crude was at $61.81 a barrel, down 32 cents, or 0.5pc.

Oil prices fell more than 4pc on Monday after US President Donald Trump said Iran was “seriously talking” with Washington, signaling a de-escalation of tensions with the Opec member.

Iran and the US are expected to resume nuclear talks on Friday in Turkey, officials from both sides told Reuters on Monday, and Trump warned that with big US warships heading to Iran, bad things could happen if a deal was not reached.

Talks with the US should be pursued to secure Iran’s national interests as long as “threats and unreasonable expectations” are avoided, Iranian President Masoud Pezeshkian posted on X on Tuesday.

“The volatile price actions of oil seen in the last four weeks have been driven by the geopolitical risk premium factor that is linked to the current US administration’s expansionary foreign policy, especially the ‘on-off’ threats towards Iran,” said OANDA senior market analyst Kelvin Wong.

Weighing on prices further, the US dollar index hovered near its highest in more than a week. A stronger greenback hurts demand for dollar-denominated crude from foreign buyers.

“The continued recovery in the US dollar yesterday, following President Trump’s nomination of Kevin Warsh as the next Federal Reserve chair, also exerted downward pressure on oil prices,” ING analysts said in a note.

On the trade front, Trump on Monday unveiled a deal with India that slashes US tariffs on Indian goods to 18pc from 50pc in exchange for India halting Russian oil purchases and lowering trade barriers.

“Overnight, the US and India agreed on a trade deal … if we do see this happen, it will only lead to a further increase in the amount of Russian oil floating at sea,” the ING analysts said.

Trump announced the deal on social media following a call with Indian Prime Minister Narendra Modi, noting that India had agreed to buy oil from the US and possibly Venezuela.

Some analysts said they were expecting volatile price movements this month.

“Looking ahead into February, prices are likely to remain choppy and range-bound … (they) are expected to stay highly reactive to headlines and macro cues rather than a decisive trend, with risk skewed to the downside,” said Phillip Nova’s senior market analyst Priyanka Sachdeva.

Follow Dawn Business on X, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Fixing bond markets
Updated 01 Oct, 2026

Fixing bond markets

Pension funds, insurance companies, mutual funds, retail investors, and eventually, foreign investors must become bigger participants in the market.
Call centre rackets
01 Oct, 2026

Call centre rackets

A NUMBER of recent raids conducted by the authorities in different cities point to the growing threat fraudulent ...
Homeward bound
01 Oct, 2026

Homeward bound

FIVE months after Somali pirates captured an oil tanker carrying a 19-member multinational crew, Somali maritime...
Kashmir unresolved
Updated 30 Sep, 2026

Kashmir unresolved

The just solution lies in India addressing the issue through a trilateral dialogue involving the legitimate representatives of the Kashmiri people and Pakistan.
Water shortage
30 Sep, 2026

Water shortage

THAT the country is entering the Rabi season with an anticipated water shortage of nearly 25pc, the lowest carryover...
Young hearts
30 Sep, 2026

Young hearts

THE observance may have passed, but the message of World Heart Day should not fade with it. The occasion is a useful...