(Investing) – Oil prices steadied Tuesday after logging steep losses in the prior session as traders digested a trade deal between India and the U.S. as well as cooling tensions between the U.S. and Iran.
At 11:27 ET (16:27 GMT), Brent oil futures for April rose 1% to $66.94 a barrel and West Texas Intermediate crude futures rose 1.1% to $62.84 a barrel.
Both benchmarks had shown weakness earlier in the session, after slumping more than 4% on Monday after U.S. President Donald Trump said Iran was “seriously talking” with Washington, signaling a de-escalation of tensions with the OPEC member.
U.S., India trade deal
Oil markets were focused on a long awaited trade deal between the U.S. and India, that slashes U.S. tariffs on Indian goods to 18% from 50% in exchange for India halting Russian oil purchases and lowering trade barriers.
“If we do see this happen, it will only lead to a further increase in the amount of Russian oil floating at sea,” said analysts at ING, in a note. “This further pressures the Urals discount to attract buyers. A lack of buyers means Russia would ultimately be forced to reduce output, tightening up the oil market.”
U.S., Iran to hold nuclear talks this week
The U.S. and Iran will resume talks over the latter’s nuclear ambitions this Friday in Turkey, a host of reports showed.
The talks come after Trump repeatedly warned Iran to accept a deal and floated the potential for military action against the country if an agreement was not reached.
News of the talks helped dispel concerns over a regional war in the Middle East, in turn drawing some risk premium out of oil markets.
Fears of a potential conflict had been a major support point for oil, especially after the U.S. deployed several warships to the Middle East and warned of a potential strike against Iran.
Still, it remained to see whether Friday’s talks would bring a major deescalation in tensions, given that earlier negotiations over Iran winding down its nuclear program have yielded limited results.
Dollar falls, helping oil
Strength in the dollar also weighed on oil prices at the end of last week and on Monday, with the greenback seeing extended gains after Warsh’s nomination.
Warsh was viewed as a less dovish pick than markets were expecting. While he is still expected to oversee more interest rate cuts by the Fed, he is also expected to limit the central bank’s asset buying operations, keeping overall monetary policy less loose than markets are hoping.
The dollar rebounded on this notion, pressuring commodity prices across the board. But on Tuesday, the greenback halted its advance, helping oil edge up.
Ambar Warrick and Peter Nurse contributed to this article
