Oil prices fell by around 1% on Tuesday, giving up gains from the previous session, as investors monitored the possibility of fresh US-Iran talks in Doha while an uneasy ceasefire continued to hold after four months of conflict.
Brent crude futures for August delivery, which expire on Tuesday, declined 1%, or 75 cents, to $72.40 a barrel as of 0653 GMT. The contract has now fallen roughly $20, or 22%, from its closing level last month. The more actively traded September Brent contract slipped 0.6%, or 45 cents, to $73.46 a barrel.
US West Texas Intermediate (WTI) crude for August delivery dropped 0.8%, or 57 cents, to $70.18 a barrel. The benchmark is on track to end the month nearly $17, or 19%, below its May 29 close.
Both Brent and WTI have now retreated close to the levels seen before the conflict in West Asia erupted.
Markets await clarity on possible Doha talks
Investors remain focused on whether Washington and Tehran will resume negotiations in Doha, although uncertainty continues to surround the proposed meeting.
“Investors are pricing in hopes of a positive outcome from the Doha talks, even though real normalisation of flows through the Strait of Hormuz is not yet visible,” said Tim Waterer, Chief Market Analyst at KCM Trade.
“The market is cautiously hopeful but still hedging its bets until we see more tangible signs of de-escalation,” he added.
Iranian Deputy Foreign Minister Kazem Gharibabadi said on Monday that Iranian and Omani officials would soon begin discussions on redefining shipping routes through the Strait of Hormuz. He also warned that Iran would seek to block vessels traveling outside designated transit corridors.
However, Iran’s Foreign Ministry spokesperson Esmaeil Baghaei later said there were no negotiations with the United States scheduled at any level in the coming days.
Speaking at the White House, US President Donald Trump also offered little clarity about the proposed talks.
“The meeting in Doha is going to be perhaps important, perhaps not. We’re going to find out,” Trump told reporters in the Oval Office.
The uncertainty has highlighted the fragile nature of the June 17 ceasefire agreement, which paused fighting after months of conflict that disrupted global oil shipments through the Strait of Hormuz and created political challenges for Trump ahead of November’s congressional elections.
China demand and Hormuz risks remain in focus
Oil prices also came under pressure amid concerns about demand from China, the world’s largest crude importer.
“We wait for more evidence of a rise in Chinese buying but cannot yet bet on a big return to the market from the world’s largest crude importer,” said Neil Crosby, Head of Research at Sparta Commodities.
Despite renewed attacks on commercial vessels in the Strait of Hormuz and fresh exchanges between US and Iranian forces in recent days, oil and liquefied natural gas exports from the Middle East have continued largely uninterrupted, according to shipping data.
Traffic through the strategic waterway reached its highest level last week since the conflict began in late February.
