Oil prices traded slightly lower on Tuesday as markets weighed the prospect of renewed diplomatic engagement between the United States and Iran against continuing uncertainty over crude supplies from the Middle East.
At 04:56 ET (08:56 GMT), Brent crude futures declined 0.6% to US$72.69 per barrel, while West Texas Intermediate (WTI) futures fell 0.5% to US$70.41 per barrel.
Markets continue to monitor the Strait of Hormuz
Traders remained focused on developments surrounding the Strait of Hormuz after reports that the United States and Iran had contained a renewed escalation that threatened the interim peace agreement reached earlier this month.
Following the announcement of the memorandum of understanding, crude prices have retreated sharply and are now trading close to levels seen before the conflict.
President Donald Trump said fresh peace talks between Washington and Tehran are expected to take place in Doha later on Tuesday. However, Iranian officials have not confirmed that negotiations will resume this week, leaving uncertainty over both the diplomatic process and the security situation in the strategic waterway.
Shipping concerns remain despite easing tensions
White House officials have said tanker traffic through the Strait of Hormuz, which carries roughly 20% of global oil supplies, is flowing normally again.
Iranian Deputy Foreign Minister Kazem Gharibabadi, however, said Tehran intends to continue pursuing a joint system to oversee shipping through the strait, even if neighbouring Oman ultimately chooses not to participate.
According to ANZ analysts, greater Iranian involvement in supervising maritime traffic could slow the recovery of crude exports from the Persian Gulf, while continued shipping risks remain a source of uncertainty for global oil supplies.
Fuel markets remain relatively tight
ANZ also noted that although crude oil has surrendered most of the gains generated during the recent conflict, refined fuel markets continue to show tighter supply conditions.
The bank said the gap between softer crude prices and firmer refined fuel prices suggests refinery margins should remain healthy even if benchmark oil prices stay relatively subdued.
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