Oil prices fell more than 1% on Wednesday as negotiations between the United States and Iran continued in an effort to reach a final agreement to end the war between the two countries, while investors awaited US petroleum inventory data.

Brent crude futures declined by $1.14, or 1.6%, to $71.81 per barrel by 08:59 GMT, while US West Texas Intermediate crude futures fell $1.11, or 1.6%, to $68.39 per barrel.

“The stalled talks between the United States and Iran are raising concerns about fresh supply disruptions,” said Tamas Varga, analyst at PVM Associates. “On the other hand, investors remain confident that any issues hindering the negotiations will eventually be resolved.”

He added: “Overall, the bearish trend remains intact, although hard data such as falling inventories or another closure of the Strait could quickly change market sentiment.”

Indirect technical talks between the United States and Iran are currently taking place in Doha, mediated by Qatar and Pakistan, according to a source with direct knowledge of the discussions who spoke to Reuters on Wednesday.

Jared Kushner, US President Donald Trump’s son-in-law, and special envoy Steve Witkoff arrived in Doha for what the White House described as “high-level” talks on Tuesday. However, both Iran and Qatar said the US delegation would meet with mediators rather than Iranian officials directly.

Largest quarterly loss in years

Brent crude fell by roughly $45 per barrel during the second quarter, marking its largest quarterly decline since the 2008 global financial crisis.

US crude futures dropped by around $31 per barrel, their steepest quarterly decline since 2020, when the COVID-19 pandemic triggered a collapse in global oil demand.

The losses followed progress toward ending the conflict in the Middle East after prices had surged sharply in March following the outbreak of hostilities.

After five consecutive monthly increases, analysts lowered their 2026 oil price forecasts for the first time since the start of the Iran war, as shipping activity through the Strait of Hormuz resumed, easing concerns about prolonged supply disruptions, according to a Reuters survey.

Oil tanker traffic through the strategic waterway has started to recover, with US Vice President JD Vance saying that oil flows through the Strait have returned to pre-war levels.

US inventories in focus

Investors are now awaiting official US petroleum inventory data from the Energy Information Administration, due at 14:30 GMT on Wednesday.

Market sources said US crude oil inventories declined again last week, according to figures released by the American Petroleum Institute on Tuesday.

Sterling fell for the first time in a week on Wednesday as a stronger US dollar gained support from rising Treasury yields ahead of key labor market data, while investors awaited comments from new Federal Reserve Chair Kevin Warsh.

The pound slipped 0.23% to $1.3234 after advancing in each of the previous four sessions, its longest daily winning streak in a month.

Sterling ended June down 0.2%, extending its decline in the first half of the year to 1.6%, marking its weakest start to a year since 2022, when it fell nearly 10% between January and June.

Political uncertainty has also added to investor concerns. With Labour Prime Minister Keir Starmer preparing to step down, markets are questioning whether leading contender Andy Burnham can revive the British economy without placing additional strain on already stretched public finances.

The dollar’s resurgence, supported by the strength of the US economy and equity markets, has been a major factor weighing on sterling and other currencies.

Against the euro, however, sterling performed better during the second quarter, gaining 1.4% and trading near its strongest level since last August.

UK rate expectations shift

Expectations for additional Bank of England rate hikes this year have eased since tensions in the Gulf began to subside, allowing oil prices to retreat toward pre-war levels.

Money markets currently assign a 90% probability that the Bank of England will raise interest rates before year-end, compared with earlier expectations that had priced in as many as three rate increases.

The Bank of England is scheduled to meet later this month to discuss monetary policy, although economists broadly expect interest rates to remain unchanged.

US jobs data in focus

Among the most important events for currency markets this week, including sterling, is Thursday’s US employment report, which could either reinforce or challenge growing expectations that the Federal Reserve may raise interest rates again in the coming months.

Central bank governors from around the world are gathering this week in Sintra, Portugal, for the European Central Bank’s annual forum.

Federal Reserve Chair Kevin Warsh will participate in one of the forum’s sessions before delivering remarks on Wednesday.

Given his preference for concise communication and limited public commentary from Federal Reserve officials, investors will closely scrutinize his remarks for clues about the future path of US interest rates.

Bank of England Governor Andrew Bailey is also scheduled to speak on Wednesday.

“Andrew Bailey may be the person to watch,” said David Stritch, strategist at Caxton. “The Bank of England is currently the most balanced among major central banks in terms of policy direction, and so far Bailey has remained largely vague about the future path of policy.”

Gold prices declined in European trading on Wednesday, extending losses for a third consecutive session and trading below the $4,000-per-ounce threshold near a seven-month low, pressured by continued strength in the US dollar against a basket of major currencies.

Markets are closely watching remarks from Federal Reserve Chair Kevin Warsh later today at the European Central Bank Forum in Sintra, along with additional key US labor market data, as investors reassess expectations for US interest rate hikes this year.

The Price

• Gold prices fell 1.2% to $3,960.53 per ounce, down from an opening level of $4,007.41. The session high was recorded at $4,018.53.

• At Tuesday’s settlement, gold lost 0.25%, marking a second consecutive daily decline. The metal also touched a seven-month low of $3,942.55 per ounce as rising US Treasury yields weighed on demand.

• Gold declined 11.75% during June, marking a fourth consecutive monthly loss and its steepest monthly decline since October 2008, driven by mounting selling pressure linked to increasingly hawkish Federal Reserve expectations.

US Dollar

The US Dollar Index rose 0.25% on Wednesday, extending gains for a second straight session and reflecting continued strength in the greenback against a basket of global currencies.

As is typically the case, a stronger dollar makes dollar-denominated gold less attractive for holders of other currencies.

The US currency has received additional support from the recent rise in long-term Treasury yields, particularly after positive labor market data reinforced expectations that the Federal Reserve could raise interest rates at least once more this year.

US interest rates

• Cleveland Federal Reserve President Beth Hammack said on Tuesday that she could still support additional rate hikes if inflationary pressures fail to ease.

• According to the CME FedWatch Tool, markets currently assign a 66% probability that the Federal Reserve will leave interest rates unchanged at its July meeting, while the probability of a 25-basis-point rate hike stands at 34%.

• For December, markets price a 17% probability of rates remaining unchanged and an 83% probability of a 25-basis-point increase.

Kevin Warsh

At 13:00 GMT, Federal Reserve Chair Kevin Warsh is scheduled to deliver an important speech at the European Central Bank Forum in Sintra, Portugal.

US labor market

Investors are also awaiting additional key US labor market data. ADP private-sector employment figures for June are due later today, followed on Thursday by weekly jobless claims and the official nonfarm payrolls report.

Outlook for gold

Market strategist Ilya Spivak said: “It appears that rising yields are the main force driving gold lower. The US dollar has also strengthened at the same time, which reinforces that view.”

SPDR Gold Trust

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged on Tuesday for a second consecutive session, leaving total holdings at 1,005.08 metric tons, the lowest level since September 24, 2025.

The euro remained under pressure against a basket of major currencies during European trading on Wednesday, extending losses for a second consecutive session against the US dollar as the greenback continued to benefit from rising US Treasury yields ahead of a closely watched speech by Federal Reserve Chair Kevin Warsh.

Investors are also awaiting key eurozone inflation data later today, along with remarks from European Central Bank President Christine Lagarde at the ECB’s annual Sintra Forum in Portugal, as markets look for fresh clues on the outlook for European interest rates.

The Price

• The euro fell around 0.2% against the US dollar to $1.1402, down from an opening level of $1.1421. The session high was recorded at $1.1423.

• The single currency closed Tuesday down less than 0.1% against the dollar, marking its first daily decline in four sessions, pressured by rising yields on US 10-year Treasury notes.

US Dollar

The US Dollar Index gained 0.2% on Wednesday, extending its advance for a second straight session and reflecting continued strength in the greenback against a basket of global currencies.

The dollar has received support from the recent rise in long-term US Treasury yields, particularly after positive US labor market data reinforced expectations that the Federal Reserve could raise interest rates at least once more this year.

Global markets are now closely watching comments from Federal Reserve Chair Kevin Warsh later today at the European Central Bank Forum in Sintra, Portugal, for further guidance on the outlook for US monetary policy.

European interest rates

• Reports suggest the European Central Bank is considering pausing its policy normalization process in July if energy prices remain near current levels.

• Money markets continue to price roughly a 30% probability of a 25-basis-point ECB rate hike in July.

Eurozone inflation

To reassess expectations for additional ECB tightening this year, investors are awaiting the release of June inflation data for the eurozone later today.

The figures will provide an updated picture of inflationary pressures facing policymakers at the European Central Bank.

The eurozone annual Consumer Price Index is due at 09:00 GMT. Market forecasts point to annual inflation easing to 3.0% in June from 3.2% in May, while core inflation is expected to slow to 2.5% from 2.6% previously.

Christine Lagarde

At 13:00 GMT, ECB President Christine Lagarde is scheduled to deliver an important speech at the European Central Bank Forum on Central Banking in Sintra, Portugal.

Markets will be looking for additional insights into inflation trends across the eurozone and the ECB’s view on the future path of interest rates this year.

Outlook for the euro

At Economies.com, we believe that if inflation data comes in softer than expected and Christine Lagarde delivers less hawkish remarks, expectations for another ECB rate hike this year could weaken further, potentially leading to additional losses for the euro against a basket of global currencies.