"What would be very intriguing is if there's some sort of gesture. Number one, will they be in the same room. If they're in the same room, is there a head nod? Or is there a 'Hi, how are you?' Is there a hand shake?" said P.J. Crowley, George Washington University Professor of Practice and a former state department official with the Clinton and Obama administrations. "If it appears they seek each other out, or at least don't resist an encounter, that in itself will have some meaning."
Tuesday's events also come ahead of a meeting Thursday on the sidelines of the UN between Iran's new Foreign Minister Mohammed Javad Zarif and representatives of the six nations trying to curb Iran's nuclear efforts.
"There's no question it's an opportunity," said Shibley Telhami, the Anwar Sadat Professor for Peace and Development at the University of Maryland. " Rouhani has been saying publicly he does have a mandate to negotiations on this and make decisions."
The Iranian supreme leader, Ayatollah Ali Khamenei has in the past controlled nuclear negotiations but under Rouhani, the negotiations have moved to the foreign ministry. Last week, Khamenei said his country should embrace diplomacy over militarism.
"There's definitely a fighting chance for it. I think it's going to be tough in many ways. I think the (Obama) Administration would win big if it has a deal that had verifiable mechanisms to assure that Iran isn't developing nuclear weapons. I personally think that is the bottom line," said Telhami. "I do not believe that they would agree to any kind of deal that would prevent them in principle to enrich uranium on their soil. The way this is possibly addressed in terms of setting limits on enrichment at 20 percent. There would have to be total accounting that is observable."
Oil has been drifting lower as Rouhani has been making overtures to the West. But Citigroup's Ed Morse, global head of commodities research, said it's more a result of an easing of Syrian tensions and the promise of more supply form Libya. Brent peaked Aug. 28 at $117.34, and it has fallen 8 percent since then to $108 per barrel Monday.
"I actually think there's no premium for Iran in the market at the moment. There was a Syrian premium that could be understood in terms of what the potential disrupting consequence of Syria might have been," he said. Morse said there currently is about 3 million barrels of oil off the market due to disruption, and at any point in time, there is at least a half million barrels.
"The peak in August was 3.6 million barrels a day, and now it's 3 million," he said. Morse said aside from Iran, he raised his expectations for oil prices in the fourth quarter because of further expectation of disruption in Libya, Iraq and Nigeria. He expects Brent prices to average $110 during the fourth quarter, and West Texas Intermediate to average $107.
"Rather than thinking that Q4 is going to be under $100 a barrel, we think it's going to be over $100."
Since Libya went offline during its civil war in February, 2011, the U.S. and Canada increased production by 2.5 million barrels a day, and Saudi Arabia is producing 2 million more barrels, while demand is up 2 million barrels a day, Morse said. "If the Libyan government is telling the truth and the market is right, there's a good 750 to 800 million barrels (of Libyan oil ) off the market."
Morse said if it appeared negotiations with Iran were successful, oil would move on the rumor but it would take months for compliance to be assured and sanctions to be lifted against the country, which has been barred from selling much of its oil and from dealing with Western financial institutions. "I think there would be a drop in the price in anticipation of that 1.2 million barrels of oil. That would be one of the most bearish facts that one could imagine coming into the marketplace."
"I think the probability of a combined set of deals involving Syria and Iran unfolding is around 35 percent as opposed to what I would have said in July, at around 10 percent," Morse said. "So, relatively speaking I think geopolitically all of the major participants – Iran, the United States, Russia, Syria – are finding themselves pressed with options that they don't find attractive and they've had to become more pragmatic than anyone would have thought they would become two years ago," said Morse. "That's a far cry from saying this is a highly likely event. It's unexpected . It could not have been orchestrated and nobody planned it."
Syria is high on the agenda at the UN this week, after the Obama Administration stood down earlier this month from an attack on the country for using chemical weapons and followed a diplomatic path instead. Syrian President Bashar Assad told Chinese state TV that his government is dedicated to implementing the Sept. 14 agreement reached between Russia and the U.S. to turn over Syria's chemical weapons to international control. But he cautioned while the weapons are under the control of the Syrian Arab Army, rebels may block UN inspectors from reaching some locations.
Crowley said one olive branch that could be extended by the U.S. to Iran, a close ally of Syria, would be to ask it to participate in a Geneva process. "That would be a huge give," he said.
"The U.S. has great concerns about the role it's playing there. The presence of Hezbollah within Syria. Strangely one of the questions facing the international community is whether the potential breakthrough on chemical weapons can create an opening for a negotiation between the Assad regime and the opposition which has been difficult to arrange," said Crowley. "One of the questions looming…is whether Iran would be invited as an interested party in resolving the conflict."
—By CNBC's Patti Domm. Follow here on Twitter @pattidomm.