Oil Dips From 2-Week High as US Said to Offer Iran Sanctions Waiver

Crude oil prices eased from two-week highs after a source close to negotiators said the US has agreed to temporarily waive sanctions on Iranian oil, a move aimed at bringing Tehran to the negotiating table. The offer, part of a new proposal, could unlock significant supply and counters a recent price surge that sent Brent crude above $112 a barrel amid fears of a widening regional conflict.

“Fears of renewed strikes on Iran have worsened supply fears … the United States letting the Russia sanctions waiver lapse didn’t help,” said Vandana Hari, founder of oil market analysis provider Vanda Insights, highlighting the extreme tightness priced into the market before the waiver news.

Prior to the report, oil markets had moved sharply higher. Brent crude futures for July delivery settled at $110.91 a barrel, up 1.51 percent, after touching their highest level since May 5. West Texas Intermediate crude traded at $107.42, a 1.9 percent gain. The rally followed a greater than 7 percent jump in both benchmarks last week as diplomatic efforts appeared to stall.

The American offer creates a critical inflection point for the market, pitting the prospect of de-escalation and more than 1 million barrels per day of Iranian supply returning to the market against the risk of failed talks. President Donald Trump is expected to meet with national security advisers on Tuesday to review military options, making the next 48 hours decisive for the direction of oil prices.

Escalating Attacks Rattle Gulf Nerves

The backdrop for the US proposal has been one of rapidly escalating military action. The United Arab Emirates on Sunday condemned a drone attack that caused a fire at a generator outside its Barakah nuclear facility. The UAE’s defence ministry said three drones entered from its western border, with officials investigating the source of what they termed a “terrorist attack.” Separately, Saudi Arabia intercepted three drones that entered from Iraqi airspace, warning it would take all necessary measures to safeguard its sovereignty.

A Market Pulled in Two Directions

The potential for new Iranian supply comes just as other barrels are being removed from the market. The Trump administration over the weekend allowed a temporary sanctions waiver on Russian seaborne oil exports to expire. The move is expected to tighten global supplies and could drive fuel prices higher for major importers like India, which had been purchasing Russian crude at record levels. The conflicting signals—a potential olive branch to Iran and a harder line on Russia—leave oil traders navigating a complex and volatile geopolitical landscape.

This article is for informational purposes only and does not constitute investment advice.