Oil retreated as traders fretted over the impact of the US-led trade war on energy demand, while sings of progress in talks between Washington and Tehran eased concerns about supplies from Iran.

Brent crude fell as much as 2.9%, to $66.01 a barrel. The International Monetary Fund is set to cut growth forecasts, and other data may also show how President Donald Trump's trade policies are affecting the global economy.

"Oil looks like it's taking a leg lower on general risk-off moves," said Ed Bell, head of research at Dubai lender Emirates NBD Pjsc. "The prevailing mood around oil still looks negative," he said, citing lower demand outlooks and global growth forecasts.

Iran's foreign minister said his country had a "better understanding" with the US on a range of principles after talks Saturday on Tehran's nuclear program. The discussions, which lasted for more than three hours, will resume Wednesday in Oman, and have the potential to affect Iranian crude supplies.

"The fact that talks are continuing may lead markets to price in an eventual return of Iranian barrels," Bell said.

Oil has declined sharply this month, touching a four-year low at one point, driven by investors' fears that the onslaught of tariffs and counter-levies between the US and its biggest trading partners will sap crude demand. The drop has been compounded by the OPEC+ alliance's decision to bring back production at a faster-than-expected pace, reviving concerns about a supply glut.

Broader financial market's also carried a risk-off tone on Monday, hurting many commodities. A gauge of the dollar fell to the lowest since December 2023 and US stock-index futures retreated after Trump criticized the Federal Reserve. Trading volumes may be lower than usual in Monday's session, with some countries observing holidays to mark Easter.

Source: Bloomberg