Brent below $85 on US-Iran talks, ahead of Fed news

Today’s headlines

What’s happening: Crude oil traded lower this morning amid rising hopes of a diplomatic solution to the US-Iran conflict.

What happened: With the US and Iran pausing attacks, investors grew hopeful of the normalisation of energy flows from the Middle East.

Oil prices continued to extend losses this morning, despite weakness in the US dollar.

Why it matters: Last night was the fourth consecutive night of peace in the US-Iran war, although tensions remain high between the two countries.

US President Donald Trump said that Washington was involved in “good talks” with Iran to end the ongoing conflict, fuelling optimism of a resolution. However, these talks come amid Trump’s continued threats of strikes.

While saying that it was ready for negotiations, Iran also threatened to resume retaliatory strikes against US bases in case of any offensive.

Negotiators from Iran and Oman met over the weekend to hold talks regarding a deal for restoring shipping traffic through the Strait of Hormuz.

Meanwhile, markets widely expect the US Federal Reserve to keep interest rates on hold at its monetary policy meeting this week.

Weakness in the US dollar lent support to crude oil prices as a softer greenback makes commodities cheaper for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, edged lower to 101.51 this morning.

Spot price for Brent crude declined 0.6% to $84.87 per barrel this morning, after shedding almost 10% in the previous session. WTI crude oil fell around 0.7% to $80.61 per barrel this morning.

In other energy trading, natural gas fell 0.8% to $2.766, while heating oil was down 0.2% at $3.9990. Gasoline bucked the market trend, rising 0.1% to $3.1734.

What to watch: Investors will keep an eye on the talks between the US and Iran.

The EIA’s (Energy Information Administration) data on crude oil stockpiles change will be released on Wednesday. Crude inventories in the US, which jumped by 2.011 million barrels in the week ended July 17, are expected to decline by 1.5 million barrels in the latest week. US gasoline inventories rose by 765,000 barrels in the week, while heating oil inventories rose by 231,000 barrels.

The markets today

US stocks in focus today ahead of a basket of major economic reports

Context: Equity markets in the US closed mixed on Monday amid a decline in chip stocks.

Details: Chipmaker stocks extended their decline ahead of the US Federal Reserve’s interest rate decision and a busy week of corporate earnings and economic data.

Nvidia’s share price declined around 5% on Monday on news of the company’s plans to provide OpenAI a $250 billion financial backstop, sparking concerns around “circular financing” in the AI sector. Shares of AMD, Micron and Intel also settled lower on profit-taking, concerns around high AI spending and global volatility.

The US and Iran halted attacks over the weekend, sending crude oil prices and Treasury yields lower, which eases speculations that the Federal Reserve hiking interest rates this week.

Most sectors on the S&P 500 closed on a positive note, with consumer staples and communication services stocks recording the biggest gains. However, energy and utilities stocks were among the worst performers on Monday.

The Dow Jones index rose 262.83 points, or 0.51%, to close at 52,210.08 on Monday, while the S&P 500 added 0.02% to reach 7,413.18. The Nasdaq 100 fell 0.32% to close at 28,039.21.

What to watch: Investors will keep an eye on the US-Iran talks.

Data on US Goods Trade Balance (1630 UAE Time), Wholesale Inventories (1630 UAE Time) and S&P/Case-Shiller Home Price (1700 UAE Time) will be released today. The goods trade deficit, which widened to $105.9 billion in May from $82.2 billion in the previous month, is expected to narrow to $101.3 billion in June. US wholesale inventories, which climbed 0.1% to $941.8 billion in May, is expected to rise by 0.2% in June. Analysts expect the S&P Cotality Case-Shiller home price index to rise by 1.3% year-over-year in May following a 1.1% gain in April.

Earnings reports from Apple, Amazon and Microsoft, due to be released this week, will also remain in focus.

Other Markets: European indices closed higher on Monday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.42%, 1.04%, 0.40% and 0.02%, respectively.

The news shaping the markets

Russia launched another wave of ballistic missile attacks on Ukraine, targeting Kyiv’s capital city on Sunday. The news sent the USD/RUB pair lower in forex trading this morning.

Taiwan’s consumer confidence index declined to 64.58 in July from 65.05 in the previous month, lending support to the USD/TWD forex pair.

UK’s shop price inflation climbed 0.9% year-over-year in July. This being the slowest growth rate since December 2025 sent the GBP/USD pair higher in forex trading this morning.

Hong Kong’s trade deficit shrank to $52 billion in June from $58.9 billion in the year-ago month, exerting pressure on the USD/HKD forex pair.

Ireland’s Credit Union consumer sentiment index edged lower to 61.6 in July from June’s reading of 62.2. However, the EUR/USD pair rose in forex trading this morning.

What else to watch today

France’s Unemployment Benefit Claims (1400 UAE Time) and Jobseekers Total (1400 UAE Time), India’s Industrial Production (1430 UAE Time) and Manufacturing Production (1430 UAE Time) as well as US ADP Employment Change (1615 UAE Time), Redbook Index (1655 UAE Time), FHFA House Price Index (1700 UAE Time), CB Consumer Confidence (1800 UAE Time), Richmond Fed Manufacturing Index (1800 UAE Time), Dallas Fed Services Index (1830 UAE Time) and Money Supply (2100 UAE Time).