Oil prices dipped on Tuesday and were poised for a monthly decline, with investors eyeing potential US-Iran talks in Doha amid a strained interim ceasefire in the four-month-old war.
Brent August crude futures, which expire on Tuesday, were down 0.9%, or 64 cents, at $72.51 a barrel as of 0356 GMT. These levels are around $20, or 22%, lower than last month’s closing. The more actively traded September contract was down 0.4%, or 31 cents, at $73.6 a barrel.
US West Texas Intermediate for August fell 0.6%, or 39 cents, to $70.36 a barrel. Prices are set for around a $17 drop, or 19%, from the May 29 closing.
Both Brent and WTI prices are almost back at pre-war levels on February 27.
“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,” Waterer added.
Iranian and Omani experts will start talks on redefining transit paths through the Strait of Hormuz in the coming days, Iranian Deputy Foreign Minister Kazem Gharibabadi told state TV on Monday, adding that his country will try to obstruct vessels outside defined paths.
However, Iran’s Foreign Ministry spokesperson Esmaeil Baghaei said there will not be any negotiation meetings at any level with the American side in the coming days.
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“The meeting in Doha is going to be perhaps important, perhaps not. We’re going to find out,” US President Donald Trump told reporters in the Oval Office.
The uncertainty over whether the two sides would meet highlighted the fragility of a June 17 agreement to pause fighting that has disrupted global oil flows through the Strait of Hormuz and posed a political challenge for Trump ahead of November’s congressional elections.
Weighing further on prices, some analysts were concerned about demand from China.
“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 Sparta Commodities head of research Neil Crosby.
Meanwhile, Middle East producers are pushing ahead with loading oil and LNG despite fresh ship attacks in the Strait of Hormuz and renewed strikes between the US and Iran in recent days, shipping data showed.
Traffic last week hit its highest level since the conflict began at the end of February.
Oil stocks in the US Strategic Petroleum Reserve fall by 5.5 million to the lowest level since 1983
Stocks of crude oil in the US Strategic Petroleum Reserve fell by 5.5 million barrels to 325.7 million barrels, the lowest level since May 1983, according to data from the Department of Energy.
The drawdowns are a part of a US agreement to release 172 million barrels from the facility to plug a gap in global inventories after the Iran war and help push down fuel prices.
US crude stocks have rapidly declined in recent weeks due to strong export and refining demand for American oil.
Since the war began at the end of February, overall US inventories, including commercial and SPR stocks, have fallen by 111.4 million barrels to 743.3 million barrels as of June 19, the lowest since 1984.Latest News, Breaking News & Top News Stories | The Express TribuneReutersRead More