Oil Rises as US-Iran Talks Stall, Bessent Heads to Japan

Oil prices edged higher on Monday as diplomatic talks between the United States and Iran remained at an impasse, with both sides rejecting each other's latest proposals. Meanwhile, US Treasury Secretary Scott Bessent traveled to Japan ahead of the upcoming Trump-Xi summit later this week, shifting market focus toward trade negotiations. The combination of stalled nuclear diplomacy and renewed trade discussions has injected uncertainty into the energy market, supporting crude prices. The standoff underscores the persistent risk of supply disruptions in the Middle East, even as OPEC+ holds significant spare capacity that could be deployed if needed. The Brent-WTI spread has widened slightly, reflecting differing regional dynamics, while US Strategic Petroleum Reserve levels remain near historic lows after last year's releases, limiting the government's ability to intervene in case of a supply shock.

For oil traders, the US-Iran standoff is a key factor to watch: a breakthrough could unlock additional Iranian supply, while continued deadlock keeps the market tight. The Bessent trip also signals potential shifts in trade policy that could affect global demand, particularly from China, the world's largest crude importer, where marginal demand has been softening amid economic uncertainty. Refining margins, as measured by crack spreads, have been volatile, with gasoline cracks weakening on ample inventories while diesel cracks remain supported by industrial demand. The futures curve has shifted from contango to backwardation in recent weeks, indicating a tighter physical market. Saudi-Russia coordination within OPEC+ remains intact, but any deviation from production quotas could alter the supply outlook. For the latest real-time fuel quotes, check NowPrice's energy commodity tracker.

Looking ahead, traders will monitor the Trump-Xi summit for any signs of a trade deal, which could boost demand expectations. On the supply side, any progress in US-Iran talks remains a downside risk for prices. This week's EIA inventory data will also provide clues on US demand trends, with crude stocks expected to draw slightly as refinery runs increase. The interplay between geopolitical tensions and economic fundamentals will likely keep oil prices range-bound in the near term, with Brent crude hovering around $75 per barrel. A sustained breakout above $80 would require a tangible supply disruption or a strong demand signal from the upcoming summer driving season.