On Thursday (February 5), the United States and Iran agreed to hold diplomatic talks, easing recent geopolitical tensions that had been supporting markets. U.S. and Iranian officials confirmed they will meet on Friday in Muscat, Oman, ending recent uncertainty surrounding the high-stakes negotiations. This confirmation came after reports that the talks were on the verge of breaking down due to disagreements over the format and location.

Oil prices came under downward pressure as US-Iran negotiations eased geopolitical concerns. During Thursday's Asian trading session, US crude oil prices fluctuated lower, currently trading around $64.25 per barrel, down about 1.3% on the day. However, specific challenges in the negotiations remain, which are expected to limit the downside potential for oil prices.

Muscat was confirmed as the meeting location after uncertainty.

The road to the negotiating table has been fraught with difficulties. Initial reports suggested the meeting might be held in Türkiye, but disagreements stalled it almost before talks even began.

However, on Wednesday, Iranian Foreign Minister Abbas Araqchi announced the new plan, saying, "Thank you to our Oman for arranging everything necessary." White House officials subsequently confirmed to news agencies that Friday's meeting in Oman finalized the arrangement.

Agenda conflicts threaten the negotiation process

Although logistical arrangements have been finalized, significant differences remain between the two sides on the substantive content of the talks. The core disagreement centers on the scope of the agenda, which could jeopardize the entire process .

Iran insists that negotiations should be limited to its long-standing nuclear dispute with Western countries. A senior Iranian official pointed out that Iran's missile program is "not on the agenda," and Tehran only welcomes talks focused on the nuclear issue.

However, the United States' demands are much broader. U.S. Secretary of State Marco Rubio made it clear that Washington wants more comprehensive discussions. Rubio said, "We are ready to meet if Iran is willing," but he listed several key issues the U.S. insists on discussing:

Iran's ballistic missile program

Its support for armed proxy groups throughout the Middle East

The way it treats its own citizens

Ongoing nuclear dispute

Another Iranian official warned that the US insistence on including non-nuclear issues in the negotiations could jeopardize their viability.

Trump increases pressure on Tehran

As preparations for the meeting progress, US President Donald Trump continues to pressure Iran's Supreme Leader Ali Khamenei. In an interview, Trump commented, "I think he should be very worried."

Trump claimed that Iran was preparing to build a new nuclear facility after the U.S. attacked Iranian nuclear facilities during the June conflict between Israel and Iran.

Trump said, "They were considering launching a new location in another part of the country, and we found out about it. I said, if you dare to do that, we will make you pay a heavy price."

In recent weeks, the Trump administration has significantly increased the deployment of U.S. troops in the region and has made it clear that it has not ruled out the possibility of new military action against Iran.

Impact analysis on the crude oil market

Market sentiment shifted on hopes of easing tensions between Washington and Tehran. These talks were a key focus for traders, especially after US President Donald Trump threatened potential military action against major OPEC oil producer Iran, fueling concerns about a wider conflict in the Middle East.

According to market analyst Tony Sicamor, concerns about a breakdown in bilateral talks eased, leading to a subsequent drop in oil prices.



(US crude oil 4-hour chart, source: FX678)

At 9:17 Beijing time, US crude oil futures were trading at $64.24 per barrel.