WTI crude plunges 4% to $87.54 as Iran nuclear talks show progress

Oil prices tumbled Tuesday after the White House signaled progress in talks to prevent Iran from acquiring nuclear weapons, raising the prospect of sanctions relief and increased crude exports.

WTI crude fell 4 percent to $87.54 a barrel and Brent crude dropped 3.5 percent to $90.86 after a White House official said negotiations to prevent Iran from obtaining nuclear weapons yielded positive results.

"There is no concrete progress in Middle East negotiations, but investors appear broadly optimistic that a longer-term resolution will be reached," said Susannah Streeter, chief investment strategist at Wealth Club.

The decline accelerated through the session as traders priced in the potential return of Iranian barrels to global markets. Iran, a member of OPEC, has the capacity to add 1 million to 1.5 million barrels a day of supply if sanctions are lifted. Prices had spiked earlier this week amid stalled talks, with Brent trading above $94 a barrel. Even after Tuesday's drop, both benchmarks remained near the bottom of their recent range and well below the $100 level seen a few weeks ago, according to David Morrison, senior market analyst at Trade Nation.

A resumption of Iranian exports would add to a market already absorbing elevated OPEC+ production and facing mixed demand signals. Eurozone inflation accelerated to 3.2 percent in May, all but ensuring a European Central Bank rate hike this month, while US job openings hit a 23-month high in April, reflecting labor market resilience. Traders are now watching Friday's US jobs report for clues on whether the Federal Reserve will hold rates steady or hike further — a decision that would shape dollar-denominated commodity demand.

The selloff in crude rippled through energy equities, with the S&P 500 energy sector falling more than 2 percent as investors rotated out of oil-exposed names. The broader market, however, advanced on optimism around AI-related tech stocks, with the S&P 500 and Nasdaq setting fresh intraday records before paring gains. The divergence underscores how the oil story, while significant for commodity markets, is competing with a powerful technology narrative that has driven equity indexes to all-time highs this year.

The Iran nuclear talks, which have been ongoing for months, entered a critical phase this week. Trump administration officials have set a deadline for a framework agreement, and the White House's characterization of "positive results" marks the most optimistic signal from Washington since negotiations began. Any deal would require verification mechanisms and a phased removal of sanctions, meaning Iranian oil is unlikely to return to markets immediately. Still, the expectation alone has been sufficient to drive a sharp repricing of crude futures.

For oil markets, the key question is whether the supply boost from Iran would be offset by OPEC+ production cuts. The alliance, led by Saudi Arabia and Russia, has maintained output restraints to support prices. If Iranian barrels return, OPEC+ may need to adjust its quotas to prevent a surplus. The next OPEC+ meeting is scheduled for early July.

"Headlines around Iran grab the steering wheel, but the AI trade remains the engine for stock markets," said Neil Wilson, analyst at Saxo Markets, highlighting how geopolitical and technology themes are competing for investor attention.

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