Oil prices fall as us-Iran peace talks raise hopes

US Global oil prices fell on Thursday as hopes of renewed peace talks between the United States and Iran eased concerns about possible supply disruptions. However, continued tensions in the Middle East kept markets uncertain. Brent crude futures dropped 1.73 per cent to $113.32 per barrel, while US West Texas Intermediate (WTI) crude fell 2.06 per cent to $100.66, according to CNBC. Reports told US Vice President JD Vance had contacted Iranian official Mohsen Rezaei to restart peace talks. Qatar has also reportedly proposed a plan to end the conflict involving Iran, the US and Israel. However, an Iranian official rejected the proposals, showing that major differences remain. Iran’s foreign minister said Tehran was still open to diplomatic efforts. Despite hopes for peace, investors remain concerned about possible attacks by Yemen’s Houthi movement and potential US military action against Iran. Any disruption to oil production or shipments could push prices higher. High oil prices increase transport and manufacturing costs, adding to inflation. This also creates challenges for central banks deciding whether to change interest rates. José Torres, senior economist at Interactive Brokers, said expensive crude oil remained a key factor driving inflation above target levels. However, he noted that wider price pressures remained relatively limited. Torres warned that sharp interest rate increases in response to oil supply problems could weaken employment and increase credit risks. A peaceful settlement could reduce inflation pressures and ease concerns over further rate hikes. He added that WTI prices falling towards $70 per barrel could strengthen the case for future US interest rate cuts. However, the outlook will depend on developments in the Middle East, oil prices and inflation.