Both WTI and Brent Crude Drop Over 4%
Oil Prices Expected to Remain Volatile
Amid Shifting U.S.-Iran Diplomatic Developments
International oil prices plunged across the board amid renewed moves to resume nuclear negotiations between the United States and Iran. As the possibility of war between the two countries has somewhat diminished, concerns over potential disruptions to oil supply have eased. However, the scale of U.S. military deployment in the Middle East continues to grow, and there remains a risk of armed conflict if negotiations fail, leading to expectations of increased oil price volatility going forward.
On February 2 (local time), West Texas Intermediate (WTI) crude closed at $62.14 per barrel, down 4.71% from the previous session. Brent crude from the North Sea also ended the day at $66.30 per barrel, a decline of 4.36% from the previous day. Oil prices, which had surged for some time, saw a sharp drop on this day. In January, WTI rose by 13% and Brent crude by 16%.
Reports that high-level talks between the United States and Iran are scheduled for February 6 have helped ease concerns over oil supply instability. U.S. political media outlet Axios, citing government sources, reported that Steve Witkoff, Special Envoy of President Trump, and Abbas Araghchi, Iran's Foreign Minister, are scheduled to meet in Istanbul, T?rkiye, on February 6 to discuss the possibility of a nuclear agreement between the two countries. Iran's Fars News Agency, also citing government sources, reported that President Pezeshkian has ordered the commencement of talks with the United States, and that the two countries are set to hold discussions on nuclear issues.
U.S. President Donald Trump also hinted at the possibility of dialogue with Iran. At a press conference held at the Mar-a-Lago resort in Florida the previous day, he stated, "We are having serious conversations with Iran," and added, "I hope we can reach an agreement."
However, the number of U.S. troops deployed to the Middle East continues to rise. According to the BBC, the U.S. government previously dispatched a carrier strike group to the Middle East, including the aircraft carrier Abraham Lincoln and eight destroyers. The BBC estimated that more than 50,000 troops have been assembled across the region in preparation for potential Iranian attacks.
Depending on the diplomatic situation between the United States and Iran, oil prices may rebound. Neil Crosby, an analyst at the commodity trading firm Sparta Commodities, told The Wall Street Journal (WSJ), "President Trump has hinted at negotiations with Iran, but the U.S. military buildup is ongoing," adding, "It is still difficult to determine the Trump administration's exact intentions, and it remains to be seen whether negotiations or confrontation will drive the market."
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