Oil climbs above $80 as US-Iran peace talks hit setback

Global oil prices rebounded on Friday after uncertainty emerged over proposed peace talks between the United States and Iran, raising fresh concerns about the pace of de-escalation in the Middle East and the restoration of normal oil flows through the region.

Brent crude rose back above $80 per barrel in early Asian trading, while US benchmark West Texas Intermediate (WTI) climbed to $76.28 per barrel, reversing part of the losses recorded earlier in the week.

The recovery followed confirmation by Switzerland’s foreign ministry that planned talks between Washington and Tehran had been postponed, casting doubt over expectations of a near-term diplomatic breakthrough.

The development came after reports that J.D. Vance, US Vice President, had cancelled a planned trip to attend the negotiations, although no official reason was provided for the decision.

Market sentiment was further rattled by renewed military activity in the region. Israel’s Defence Forces (IDF) said it carried out overnight strikes against Hezbollah targets and infrastructure in southern Lebanon, citing repeated violations of an existing ceasefire agreement.

The latest escalation threatens efforts to secure a broader regional settlement, as Iran has reportedly linked its acceptance of a peace agreement to an end to Israel’s military operations in Lebanon.

Analysts said the postponement of the talks has reintroduced geopolitical risk premiums into oil markets after traders had spent much of the week pricing in expectations of a lasting ceasefire and the reopening of critical energy supply routes.

Earlier in the week, oil prices had fallen below $80 per barrel as investors anticipated that a peace deal would allow crude exports and tanker traffic to resume more freely through the Persian Gulf and the Strait of Hormuz.

Reports of oil tankers queuing to enter and exit the region had reinforced expectations that supply disruptions would ease quickly.

However, Friday’s price rebound suggests traders are increasingly sceptical that normalisation will occur in the near term.

Energy analysts noted that even if a political agreement is eventually reached, restoring confidence in regional shipping routes and stabilising crude exports could take weeks or months.