Oil markets steady as US-Iran talks reach turning point

GULF SHIPPING AND OIL MARKETS STABILIZE AS US-IRAN DIPLOMACY ENTERS CRITICAL PHASE

Brent crude fell below $88 per barrel after the military pause took hold, unwinding much of the war premium that had built up during weeks of escalating operations. Traders increasingly believe the worst-case scenario, a prolonged closure of the Strait of Hormuz, may be avoided if negotiations hold. Lower oil prices could ease fuel costs and inflationary pressures globally, though analysts warn that prices remain vulnerable to any renewed strikes on energy infrastructure.

The diplomatic landscape shifted this week when US President Donald Trump signaled Washington’s willingness to negotiate. Speaking aboard Air Force One, Trump said there was a “good chance” of reaching an agreement, but warned the US was prepared to resume “very strong military action” if talks collapse. Tehran, for its part, continues to insist there are “no direct talks” with Washington, maintaining that any communication runs through regional mediators.

For the UAE, which operates one of the world’s busiest maritime trade networks, restoring normal shipping lanes is a critical economic priority. Commercial shipping has yet to return to pre-conflict levels. Traffic through the Strait of Hormuz remains well below normal as shipowners exercise caution. Iran and Oman are working on arrangements to guarantee safer passage for commercial vessels, while broader diplomatic discussions continue over navigation rights in the strategic waterway.

Meanwhile, the UAE has maintained that diplomacy offers the best path to resolving the conflict. Abu Dhabi has repeatedly condemned attacks on civilian infrastructure, particularly drone strikes targeting Saudi energy facilities, while calling for restraint from all parties.

Despite regional tensions, daily life across the UAE continues largely without disruption. Airports, ports and businesses are operating normally. Commercial aviation continues to adjust routes around areas of military activity when required, and airlines serving the UAE are monitoring regional airspace closely. Passengers are advised to check flight status before travelling, though no widespread airport disruptions have been reported.

Authorities have not issued new public emergency guidance for residents. Security analysts say the immediate risk of large-scale military escalation has eased compared with earlier this month, though the situation remains highly fluid.

The greatest risks to stability remain a collapse in US-Iran diplomacy, renewed attacks on Gulf energy infrastructure, disruptions to shipping through Hormuz or Bab el-Mandeb, and fresh missile or drone strikes by regional proxy groups.

Diplomatic efforts are expected to intensify this week. Regional mediators including Oman, Qatar, Pakistan and Egypt are working to preserve the current pause in fighting and establish a broader framework covering maritime security, sanctions and Iran’s nuclear programme.

The guns have largely fallen silent and markets have steadied, but neither Washington nor Tehran has ruled out a return to confrontation if negotiations fail. What remains unresolved is whether the current pause can be converted into a durable framework, or whether the next breakdown in talks sends oil prices and shipping risk premiums sharply higher once again.