Iran delays nuclear talks with US as crude rises 9% on supply fears

Iran delayed nuclear talks with the US hours before they were set to begin in Switzerland, pushing crude oil prices higher as renewed fighting between Israel and Hezbollah in southern Lebanon threatened the fragile detente that had reopened the Strait of Hormuz.

"The postponement reflects Iran's insistence that a Lebanon ceasefire be part of any broader agreement, which complicates the 60-day negotiating window," said Elena Fischer, geopolitical risk analyst at Edgen. "The market is now pricing in a higher probability that the strait could be disrupted again."

Brent crude traded at about $79 a barrel Friday, paring a weekly decline that had reached 9% after the US and Iran signed a memorandum of understanding Wednesday. WTI oil followed suit as traders weighed the reopening of the Strait of Hormuz — which saw 12.5 million barrels transit Wednesday night alone — against the risk that renewed Israel-Hezbollah clashes could unravel the agreement. The Israeli military said four soldiers were killed, including a battalion commander, while strikes in Lebanon killed 18 people, according to the state-run National News Agency.

The delay means the 60-day window for negotiating a permanent nuclear deal — covering uranium enrichment limits, IAEA inspections and sanctions relief — has not yet started. Vice President JD Vance, who was to lead the US delegation, scrapped his overnight flight to Switzerland. "If the chokepoint is not open, there's not going to be a final deal," Vance told the New York Times. Crude prices remain roughly 30% higher for the year, and emergency petroleum stockpiles drawn down at a record rate during the war will need to be replenished, adding to global demand.

The MOU signed by President Donald Trump and Iranian counterpart Masoud Pezeshkian at the Palace of Versailles on Wednesday lifted the US naval blockade of Iranian ports and reopened the strait, which handles about 21% of global oil trade. Iran agreed to dilute its stockpile of highly enriched uranium under international supervision and invite the International Atomic Energy Agency to inspect its nuclear sites. But the deal drew sharp criticism from some congressional Republicans and from Israel, which has pushed for a harder line.

Trump has sworn at Israeli Prime Minister Benjamin Netanyahu in recent calls, accusing him of nearly scuppering the agreement by escalating strikes in Lebanon, according to people familiar with the conversations. Israel's far-right National Security Minister Itamar Ben Gvir responded to the latest fighting by saying "the whole of Lebanon must burn," underscoring the gap between US and Israeli priorities.

Iranian Supreme Leader Ayatollah Mojtaba Khamenei, in his first reaction to the agreement, appeared to endorse direct negotiations — a shift from the hard-line stance of his father, the previous supreme leader, who long opposed talks with the US. "It is obvious that the face-to-face negotiations that will be held in the future will not mean accepting the enemy's opinion," Khamenei said in a statement read by state media.

The last time US-Iran nuclear talks collapsed — after Trump withdrew from the 2015 Joint Comprehensive Plan of Action in 2018 — Iran accelerated enrichment to 60% purity, within weeks of weapons-grade, and oil prices rose more than 20% over the following six months as sanctions tightened.

Switzerland's Foreign Ministry confirmed the talks were "postponed" without giving a reason, adding that "the relevant preparatory work" at the host resort of Burgenstock is continuing. A White House spokesperson cited logistical challenges, saying an American delegation is prepared to depart at the first available opportunity.

This article is for informational purposes only and does not constitute investment advice.