Oil prices rose sharply on Monday, nearing a six-month high, as negotiations between the United States and Iran regarding Iran’s nuclear program entered a critical phase. Brent crude futures settled at $71.39 a barrel, a decrease of 37 cents, while West Texas Intermediate (WTI) crude fell 27 cents to $66.21 a barrel, according to reports from CNN Business Arabic and Reuters.

The current surge in oil prices reflects market apprehension regarding potential disruptions to global supply, particularly as tensions between Washington and Tehran remain elevated. According to a report by Al Jazeera, the United States and Iran conducted talks in Oman last week, allowing Tehran to assess the seriousness of Washington’s intentions and revealing sufficient common ground to continue diplomatic efforts. However, the talks are occurring against a backdrop of military posturing and escalating rhetoric from both sides.

Ali Shamkhani, an advisor to Iran’s Supreme Leader Ali Khamenei, stated that the country’s missile capabilities are a “red line” and not subject to negotiation, as reported by Iranian news outlet Nour News. Meanwhile, former U.S. President Donald Trump, in an interview with Fox Business, suggested that Iran “wants to make a deal and it would be foolish not to.”

Iran is currently the fifth-largest producer of crude oil within the OPEC+ alliance, with production averaging approximately 3.3 million barrels per day, according to Al Jazeera. However, Iranian oil exports have fallen to a two-year low, according to data from Kepler, a commodity information company, amid ongoing tensions with the United States. Amine Bakr, head of energy at Kepler for the Middle East, told CNN that the decline in Iranian exports is linked to a slowdown in shipments to China.

The potential for further escalation remains significant. Erem News reported that Iran has threatened to disrupt traffic through the Strait of Hormuz, a vital artery for global energy supplies, should tensions continue to rise. Clayton Siegel, an oil analyst at the Center for Strategic and International Studies, has indicated potential scenarios that could impact prices, including a possible U.S. Or Israeli blockade of Iranian exports without direct military attack.

Market analysts are closely monitoring the situation. Sol Kavourukakis, a senior energy analyst at MST Markets, noted that oil markets are “in a state of anticipation awaiting developments in the Iranian situation, with a healthy dose of skepticism towards any rhetoric calling for de-escalation,” as reported by Al Eqt.com.

An Iranian official told Reuters that Tehran is prepared to make concessions regarding its nuclear program in exchange for sanctions relief and recognition of its right to enrich uranium. However, Phil Flynn, an analyst at Price Futures Group, cautioned that the risk of an attack on Iran remains high.

The next round of negotiations between the U.S. And Iran is scheduled for Thursday, but the outcome remains uncertain.