Oil Continues to Fall Amid US-Iran Talks to End the War

SadaNews - Oil continued its sharp decline after President Donald Trump said that the United States and Iran are engaged in talks to try to end the Middle East conflict, with both sides continuing to refrain from launching attacks.

Brent crude, the global benchmark, fell towards $87 a barrel after losing 8.7% on Monday, marking its largest decline in over three months. West Texas Intermediate crude traded near $81.

Trump stated that he decided to suspend strikes to give negotiations another chance, according to Axios. He also suggested in remarks to reporters aboard Air Force One that there is a "good chance" of making progress in the talks. However, it remains unclear whether any substantive discussions are taking place.

Crude oil has experienced sharp fluctuations this month, initially rising amid renewed hostilities between Washington and Tehran, and the extension of the war into the Red Sea, before falling as tensions eased in recent days. However, traders remain cautious, as tanker traffic through the Strait of Hormuz has yet to return to normal.

Scott Shelton, an energy specialist at TP ICAP Group Plc, stated, "I don't believe the Middle East crisis has ended." He added that there is a need for "real evidence of oil tankers moving through the Strait of Hormuz, which I believe has not happened yet."

Later on Tuesday, President Trump is scheduled to meet with Israeli Prime Minister Benjamin Netanyahu in Washington for talks regarding Iran. The two countries launched a campaign in February in an effort to thwart Tehran's nuclear program.

Traffic observed through Hormuz was limited early Tuesday, although some vessels appeared to have sailed through without turning on their transponders.

On the previous day, only four ships crossed, according to Kpler data. About 25 cargo ships passed through the Bab al-Mandab on Monday, including several vessels carrying Russian oil shipments via the Red Sea, according to Kpler.

Talks to Resume Shipping Through the Strait of Hormuz

In the Middle East, negotiators from Iran and Oman are attempting to reach an agreement to resume shipping traffic through Hormuz, which connects the Arabian Gulf to global markets and was responsible for one-fifth of daily oil flows in peacetime.

Iran and Oman, which overlook the strait, continue discussions following a meeting of their officials in Tehran over the weekend, according to informed sources. They stated that a successful agreement would then allow Iran and the United States to resume talks about ending their war.

The Iranian military has stated that it has halted responses to US bases and forces in the region due to Trump’s decision to refrain from launching strikes. Tehran had been carrying out attacks on countries like Kuwait, Bahrain, and Jordan almost daily during the two weeks leading up to the US's suspension of strikes on Friday.

Disruptions in supply elsewhere have eased, as the main terminal in Kazakhstan resumed loading operations after exports were disrupted by Ukrainian drone attacks. The Energy Ministry reported that two tankers have begun loading at the Caspian Pipeline Consortium facility near the Russian port of Novorossiysk.

For its part, Macquarie Group Ltd warned that an oversupply is likely to return before the end of the year, as Washington faces increasing pressure to end the conflict with Iran.

They stated that once an agreement is reached, the oil market will enter a state of "significant" oversupply, with a projected daily surplus of two million barrels in the fourth quarter.

Latest Price Movements:

Brent crude for September delivery fell by 1.4% to $87.15 a barrel as of 10:22 AM in Singapore.

West Texas Intermediate crude for September delivery decreased by 1.6% to $81.30 a barrel.