Oil prices dipped around 1% on Tuesday, reversing the previous session’s gains, and were poised for a monthly decline, with investors eyeing potential U.S.-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 1%, or 75 cents, at $72.4 a barrel as of 0653 GMT. These levels are around $20, or 22%, lower than last month’s closing. The more actively traded September contract was down 0.6%, or 45 cents, at $73.46 a barrel.
U.S. West Texas Intermediate for August fell 0.8%, or 57 cents, to $70.18 a barrel. Prices are set for around a $17 drop, or 19%, from the May 29 closing.
Both Brent and WTI prices are flirting with pre-war levels.
“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.
“The meeting in Doha is going to be perhaps important, perhaps not. We’re going to find out,” U.S. 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 U.S. and Iran in recent days, shipping data showed.
Traffic last week hit its highest level since the conflict began at the end of February.
