Key Takeaways:
The US and Iran opened indirect technical talks in Doha on Wednesday, with Qatar and Pakistan acting as mediators, as Brent crude slid to $72.51 a barrel — near levels last seen before the four-month conflict erupted.
"The talks are focused on implementing the 14-point Memorandum of Understanding that ended the war, including the permanent reopening of the Strait of Hormuz," a diplomat familiar with the discussions told AFP. The Iranian delegation is led by Deputy Foreign Minister Kazem Gharibabadi, while US envoy Steve Witkoff and Jared Kushner met separately with Qatari mediators rather than directly with Iranian officials.
Brent August futures fell 0.9% to $72.51 a barrel as of 0356 GMT, extending a monthly decline of roughly 22% that has erased most of the war premium built since late February. West Texas Intermediate traded at similar levels, with both benchmarks approaching their Feb. 27 closes before the US-led offensive against Iran began. The decline reflects growing expectations that the Doha process could stabilize shipping through the Strait of Hormuz, which handles about 21% of global seaborne oil trade.
The stakes extend well beyond crude. Turkey's manufacturing sector slipped back into contraction in June as the conflict weighed on demand and supply, with new orders falling sharply and export orders returning to decline after a brief recovery in May. Sri Lanka cut retail diesel and petrol prices for the first time since the war-driven spikes, reducing diesel by 25 rupees to 382 rupees per liter after supply restrictions eased. Indian sailors, a major contributor to global merchant shipping, are refraining from returning to Gulf routes after colleagues were killed or wounded during the conflict, according to AFP.
The talks come amid a fragile truce that has frayed repeatedly. Iran's Parliament Speaker and chief negotiator Mohammad Bagher Ghalibaf warned Tuesday that Tehran would "definitely react" to what it described as repeated violations of the ceasefire in the Persian Gulf, saying incidents at night amounted to breaches of the understanding. He credited the MoU with already delivering concrete results, including the lifting of the naval blockade on June 14 after Pakistan's prime minister announced the end of the war and President Donald Trump confirmed the move on Truth Social.
The last time US-Iran hostilities escalated to direct exchanges in late May, Brent spiked above $95 a barrel and the VIX jumped to 28, while Gulf equity markets shed more than 5% in a single week. The current calm — oil below $73 and the VIX in the high teens — suggests markets are pricing a meaningful probability of de-escalation, though the gap between diplomatic progress and on-the-ground friction remains wide.
Iran has sent mixed signals about the Doha process. Foreign Ministry Spokesperson Esmaeil Baghaei initially denied any bilateral talks were scheduled, saying an expert delegation would visit Qatar only to follow up on MoU implementation. "Iran's priority currently is following up on implementation of the MoU," Baghaei said, according to Tasnim news agency. Yet Gharibabadi confirmed technical-level engagement is underway, and Qatar's Foreign Ministry said a direct deconfliction communication channel in the Strait of Hormuz has been actively used in recent days to prevent confrontations from escalating.
Shell's 2026 LNG outlook said global LNG trade this year could match 2025 levels if shipping via the Strait of Hormuz returns to normal by summer, before resuming growth in 2027. The assessment underscores how the conflict has disrupted not just oil markets but the broader energy supply chain across the Middle East.
This article is for informational purposes only and does not constitute investment advice.
