Oil prices fall amid US-Iran peace talks hopes; Brent at $97. Where are prices headed?

US-Iran war: Oil prices declined on Thursday, 4 June, after the ceasefire agreement between Israel and Lebanon raised optimism about a broader resolution to the US-Israeli conflict with Iran. Sentiment was also influenced by the US House passing a resolution aimed at limiting President Donald Trump's authority to engage in military action.

Brent crude futures fell 67 cents, or 0.69%, to $97.14 per barrel, while US West Texas Intermediate (WTI) crude dropped 62 cents, or 0.65%, to $95.40 per barrel.

Both benchmark indices climbed around 2% on Wednesday, building on gains from the previous session amid escalating tensions in the Middle East, including Iranian attacks on Kuwait and US military strikes near the Strait of Hormuz.

Back home, crude oil prices on the Multi Commodity Exchange (MCX) also witnessed similar downward movement, tracking global oil prices. MCX Crude oil prices fell 1.26% to ₹9,124 per barrel.

What's driving crude oil prices?

In the United States, the Republican-controlled House passed a resolution on Wednesday seeking to prevent President Trump from continuing military action against Iran. However, the measure would still require Senate approval and a two-thirds majority in both chambers to overcome an almost certain presidential veto.

Trump also indicated on Wednesday that negotiations with Iran could see progress as early as this weekend, according to a Bloomberg report.

Meanwhile, Iranian Foreign Minister Abbas Araqchi stated that communication channels between Tehran and Washington remain open, although no breakthrough has been achieved in the talks so far. He added that both sides are currently reviewing the draft texts that have been exchanged.

According to the report, Trump said the Strait of Hormuz would reopen “immediately” once Iran signed a memorandum of understanding to halt armed hostilities, subject only to the clearance of a few remaining areas and any mines present. He also sought to allay concerns over the impact of mines on commercial shipping through the waterway.

What's near-term outlook of crude oil price?

Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities, believes that Brent is likely to trade a wide and choppy $92–100 band in the near term.

“A credible written framework between Washington and Tehran could quickly knock $5–6 off prices, while any strike on Gulf energy infrastructure could push Brent back above $100. On MCX, crude futures are likely to trade in a broad ₹8,600–9,500 range, with dips likely to be bought as long as Hormuz stays closed and inventories keep falling,” Banerjee said.

On the technical outlook, Ponmudi R, CEO of Enrich Money, said that MCX Crude Oil is trading above the ₹9,000 zone, staging a technical bounce from the lower end of the ascending trendline near ₹8,200 that continues to provide structural support, with MACD and broader technical indicators suggesting a weakening of bearish momentum on the daily timeframe.

“Immediate resistance stands at ₹9,150– ₹9,200; a sustained move above this zone could trigger a recovery toward ₹9,250– ₹9,330. On the downside, ₹8,860– ₹8,800 acts as immediate support; a break below this area could extend the decline toward the ₹8,750 zone. The near-term bias remains cautiously bullish, with direction largely driven by ongoing geopolitical developments,” Ponmudi said.

Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.