Oil prices eased on Tuesday after Qatar's Foreign Ministry said Iran-Oman talks over the Strait of Hormuz have reached an advanced stage. The pullback followed a more than 5% surge on Monday, when President Trump said he would seek compensation from Iran as part of any peace deal.
Oil prices eased on Tuesday after Qatar's Foreign Ministry spokesperson said negotiations between Iran and Oman over the Strait of Hormuz are in an advanced stage, adding that the talks are at a critical crossroads. Qatar has served as a mediator in the diplomatic push to de-escalate tensions in the Middle East.
Prices pull back from Monday's surge
Brent crude futures edged down 0.1% to $87.61 a barrel by 08:05 ET (12:05 GMT), while U.S. West Texas Intermediate crude futures inched up 0.1% to $82.22 a barrel. Both benchmarks had settled up more than 5% on Monday, after President Donald Trump said he would seek compensation from Iran as part of any peace agreement, while Tehran demanded reparations and other concessions. The elevated prices added to concerns that a prolonged disruption to energy supplies could rekindle inflation and persuade the Federal Reserve to hike interest rates in response.
The U.S. and Iran have also presented conflicting claims on the status of the Strait of Hormuz. Washington has suggested the waterway is open for commercial shipping, while Tehran stressed that it has effectively shuttered the channel with mines and drones. These developments tempered recent expectations, triggered in part by upbeat assertions from U.S. authorities just days ago, that a deal may be coming soon; optimism for a possible agreement had sent oil prices down sharply last week.
Analysts point to headline-driven swings
According to ING: "the oil market remains very headline-driven, which leaves prices whipsawing". Iran said it was close to a final deal with Oman to set new shipping routes through the Strait of Hormuz, but insisted that the U.S. must meet other conditions, including a lifting of all sanctions, before the waterway can be reopened.
Tanker traffic stays thin
The strait supplied roughly a fifth of the world's oil supplies prior to the joint U.S. and Israeli assault on Iran in late February. Tanker traffic began to resume following a framework U.S.-Iran ceasefire deal in June, but activity has dwindled since renewed Iranian attacks on vessels passing through the region all but dismantled the fragile agreement.
Citing shipping data from Kpler, Reuters reported that four commodity vessels, including two empty oil product tankers, made their way through the conduit on Monday. A small tanker carrying liquefied natural gas and another transporting residual fuels also exited the strait. The 10-day average for sailings sits around 11 vessels, Reuters said.
Source: Investing.com
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