Brent crude futures dropped more than 2 percent below $68 per barrel on Thursday, February 5, 2026, ending a two-day rally after Tehran confirmed nuclear discussions with Washington would take place this week, reducing concerns that a broader regional conflict could disrupt oil supplies.
Iranian Foreign Minister Abbas Araghchi announced late Wednesday that talks are scheduled for Friday, February 7, 2026, at 10:00 AM local time in Muscat, Oman. A White House official confirmed that the United States will participate in high-level talks with Iran in Oman, rather than in Turkey as originally planned.
The confirmation of diplomatic engagement prompted traders to reassess the immediate risk to supply, weighing on oil prices after they had climbed over the previous two sessions on heightened geopolitical tensions in the Middle East.
Disagreements remain over the scope of the talks. Tehran is seeking to confine discussions strictly to its nuclear program and sanctions relief, while Washington hopes to expand the agenda to include Iran’s ballistic missile program, support for regional militant groups, and human rights issues, according to United States Secretary of State Marco Rubio.
The White House official, who was not authorized to comment publicly and spoke on condition of anonymity, said several Arab and Muslim leaders urged the Trump administration on Wednesday not to walk away from talks, even as Iranian officials pressed to narrow the scope and change the venue. The official added that the White House remains very skeptical that the talks will be successful but agreed to the change out of respect for allies in the region.
Tensions between the two countries escalated after United States President Donald Trump suggested Washington might use military force against Tehran in response to Iran’s crackdown on protesters. On Tuesday, February 4, 2026, a United States Navy fighter jet shot down an Iranian drone that approached an American aircraft carrier in the Arabian Sea. Iranian fast boats from its paramilitary Revolutionary Guard also attempted to stop a United States-flagged ship in the Strait of Hormuz, the narrow passage of the Persian Gulf.
Despite these incidents, diplomatic channels remain open. Iranian President Masoud Pezeshkian said Tuesday he had instructed the foreign minister to pursue fair and equitable negotiations with the United States.
On the supply side, United States crude inventories fell by 3.5 million barrels to 420.3 million barrels for the week ending January 30, 2026, according to the Energy Information Administration (EIA) released Wednesday. The decline exceeded analyst expectations of a 489,000-barrel rise, signaling stronger demand.
Oil prices had risen over the past two sessions, driven by increased geopolitical risk premium in the Middle East. The confirmation of talks reduced that premium as markets recalibrated supply disruption risks.
Market analysts note that oil markets will continue to monitor United States-Iran diplomacy, along with broader geopolitical developments, for indications on the direction of global energy prices and potential supply disruptions.
