Possible US-Iran Talks Breakdown Lifts Oil Prices

Brent crude futures gained 13 cents to trade at $65.54 a barrel and the US West Texas Intermediate (WTI) crude futures increased by 20 cents to $62.69 a barrel.

Moody’s lowered the US credit rating down one notch to Aa1 from Aaa, bringing the agency in line with peers. The firm cited financing challenges tied to the federal government’s growing budget deficit and the ramifications of rolling over existing US debts in a period of high borrowing costs.

The debt downgrade pressured the markets at a time when the economy is already awaiting the full impact of President Donald Trump’s unfolding tariff policy.

Meanwhile, Deputy Foreign Minister Majid Takht-Ravanchi said nuclear talks will lead nowhere if the US insists that Iran stop its uranium enrichment activity.

Market analysts noted that the remark dented hopes for an agreement, which would have paved the way for the easing of US sanctions and allowed Iran to raise its oil exports by 300,000 to 400,000 barrels per day.

Pressure also came from news of slowing industrial output growth and retail sales in China, the top oil importer.

Also, additional pressure came from US Treasury Secretary Scott Bessent’s comments that President Donald Trump will impose tariffs at the rate he threatened last month on trading partners that do not negotiate.

Russian President Vladimir Putin, after a call with Trump on Monday, said Moscow was ready to work with Ukraine on a memorandum about a future peace accord and that efforts to end the war were on the right track.

An end to the Ukraine war would pave the way for the lifting of some Western sanctions against Russia’s oil sales, potentially boosting global supply and adding more pressure to oil prices.

Goldman Sachs analysts have revised their outlook for global oil demand upwards, now expecting growth of 600,000 barrels daily this year and 400,000 barrels daily in 2026.

The bank, however, maintained its oil price forecast at $60 per barrel of Brent crude and $56 per barrel of WTI for this year. Brent crude was trading at over $65 per barrel at the time of writing, and WTI was trading at over $62.

Goldman’s analysts expect the benchmarks to fall further next year, to $56 for Brent crude and $52 for WTI.