Baghdad: Oil prices fell on Thursday after the United States and Iran agreed to hold talks in Oman on Friday, easing concerns about a potential military conflict that could disrupt crude oil supplies from the Middle East.

According to National Iraqi News Agency, Brent crude futures decreased by $1, or 1.4%, reaching $68.47 a barrel by 1:52 GMT (4:52 AM Baghdad time). Meanwhile, US West Texas Intermediate crude futures saw a decline of 91 cents, or 1.4%, settling at $64.23 a barrel.

This decline followed a rise in oil prices by about 3% on Wednesday, driven by reports suggesting that the talks between Washington and Tehran might not proceed. The confirmation from both sides about the continuation of the talks helped calm markets and reduce the associated risk premium.

Despite the easing of tensions, markets remain vigilant about the situation’s developments, given previous US threats to target Iran, the fourth-largest oil producer in OPEC, and the potential for wider repercussions on regional supplies.

Approximately one-fifth of the total global oil consumption passes through the Strait of Hormuz, situated between Oman and Iran. Several OPEC countries, including Saudi Arabia, the UAE, Kuwait, and Iraq, depend on the strait for exporting most of their oil.

Conversely, oil prices received limited support from US data showing a decline in crude oil and refined product inventories last week, despite an increase in gasoline stockpiles.