Oil prices have dropped significantly in the global market as concerns over international supply eased following indications of positive progress in talks between the United States and Iran.

Driven by this development, prices for both Brent and West Texas Intermediate (WTI) crude have plunged to their lowest levels in the last four months.

According to Al Jazeera, oil prices dropped by more than 1% in the international market following positive remarks from Washington regarding improving relations between the US and Iran. Reuters data shows that Brent crude futures fell by $1.38, or 1.89%, to settle at $71.57 a barrel.

Meanwhile, US West Texas Intermediate (WTI) crude futures dropped by 92 cents, or 1.32%, to close at $68.58 a barrel. Both benchmarks concluded their trading sessions at their lowest levels since March.

The slump followed statements from President Donald Trump and Vice President JD Vance, who noted that discussions between the United States and Iran were progressing "very well" and "extremely well," respectively.

In a separate report, Reuters highlighted that oil prices fell over 1% on Wednesday (July 1) to touch their lowest levels since March. Supply anxieties in the market cooled significantly after President Trump commented that the US-Iran talks in Qatar were moving in a positive direction.

Ole Hansen, Head of Commodity Strategy at Saxo Bank, noted, "The negotiations currently taking place in Qatar are perceived as being positive. Consequently, this has allowed prices to drift further down, and there is a chance we could see even lower prices."

On Wednesday, Trump stated that relations between the US and Iran were going "very well" and that the recent meetings in Qatar had been productive.

A source directly involved in the negotiations and an Iranian official confirmed that the US and Iran held technical-level talks in Doha aimed at securing a lasting ceasefire and ensuring the safe flow of commercial shipping through the Strait of Hormuz.

However, the two nations have publicly maintained differing positions regarding the interpretation of the interim understanding and even exchanged strikes against each other last week.

Phil Flynn, a senior analyst at the Price Futures Group, commented, "Optimism has grown as more oil moves through the Strait of Hormuz. The market signal indicates that once this situation is fully resolved, the world could produce more oil than ever before."

US Vice President JD Vance stated that oil tanker traffic through the critical Strait of Hormuz has returned to pre-war levels, though he did not provide specific figures.

Meanwhile, the US Energy Information Administration (EIA) reported that domestic crude inventories fell by 3.8 million barrels last week to 408.4 million barrels—the lowest level since September 2018.

This drop in stockpiles was driven by rising demand from domestic refineries ahead of the July 4th holiday. However, the actual decline was smaller than the 4.5 million-barrel draw that analysts had predicted in a Reuters poll.

A Reuters survey revealed that analysts have cut their 2026 oil price forecasts for the first time since the outbreak of the war with Iran, ending five consecutive months of increases.

Concurrently, the gradual reopening of the Strait of Hormuz has eased long-term fears of prolonged supply disruptions.

Against this backdrop, Brent crude prices plummeted by nearly $45 in the second quarter of this year, marking its largest quarterly decline since the 2008 global financial crisis.

During the same period, US crude futures dropped by nearly $31, recording their steepest quarterly decline since the COVID-19 pandemic crushed global energy demand in 2020.