International oil prices dropped sharply on Monday after the first round of high-level US-Iran talks in Switzerland concluded with Tehran announcing it had secured waivers for crude and petrochemical exports. Brent crude, the global benchmark, fell more than 2% to trade near $78 a barrel, reversing an early spike above $82 that had been fuelled by presidential threats and Iran’s reported re-closure of the Strait of Hormuz. The decline extended last week’s 8% slide, as markets rapidly priced in the prospect of additional Iranian barrels returning to global supply.

The price retreat was driven by a swift recalibration of supply risk. Iran’s foreign minister stated that sanctions on oil and petrochemical exports had been suspended, a maritime blockade lifted, and some frozen assets released. Mediators from Qatar and Pakistan confirmed that the two sides agreed on a roadmap to reach a final deal within 60 days and established a ‘communication line’ to manage incidents in the Strait of Hormuz, through which roughly one-fifth of global oil trade normally passes. Ship-tracking data showed a modest resumption of tanker traffic on Monday, including Qatari LNG carriers and crude-laden vessels, after a sharp drop in transits over the weekend. Analysts in London and Singapore noted that even a partial normalisation of Hormuz flows, combined with the potential return of up to 1.5 million barrels per day of Iranian crude, was enough to deflate the geopolitical risk premium that had accumulated since hostilities erupted in February.

The talks, mediated by Pakistan and Qatar at a Swiss resort, were described as ‘positive and constructive’ despite a rocky start that included a walkout by Iranian delegates over a social-media threat from President Trump. US Vice President JD Vance said Washington had created a coordination mechanism to ensure safe navigation and de-escalate incidents. Other Gulf producers moved to reassure markets: the UAE, Kuwait and Iraq offered additional crude to customers, and Iraq outlined plans to gradually restore output to 4.2–4.3 million barrels per day. Yet the backdrop remains volatile. Israeli strikes in Lebanon killed at least 20 people on Saturday, a day after a ceasefire with Hezbollah took effect, and both sides appear intent on continuing their struggle, market analysts observed. Viewed from Frankfurt, Commerzbank cautioned that the renewed Hormuz closure over the weekend would keep markets wary of rapid progress toward a durable agreement.

The immediate focus shifts to technical talks due to begin this week, which will test whether diplomatic momentum translates into verifiable steps on the ground. Traders will monitor vessel movements through Hormuz as a real-time indicator of de-escalation. Beyond the Gulf, broader macro signals loom: US personal consumption expenditure inflation data later in the week and minutes from Brazil’s central bank will shape rate expectations. For oil markets, the 60-day ceasefire extension provides a narrow window to move from interim waivers to a permanent sanctions framework, but the risk of a flare-up in hostilities, as ING analysts noted, remains ‘very real’.