Oil prices moved modestly lower on Tuesday as traders continued to assess the risk of supply disruptions tied to heightened U.S.–Iran tensions, while broader market fundamentals pointed to sufficient global supply.
Brent crude futures fell 24 cents, or 0.35%, to $68.80 a barrel by 10:02 GMT. U.S. West Texas Intermediate declined 30 cents, or 0.47%, to $64.06.
“The market remains focused on the tensions between Iran and the U.S., but without clear evidence of supply disruptions, prices are likely to drift lower,” said Tamas Varga, an oil analyst at PVM.
“The market is range-bound — an oversupplied market colliding with geopolitics,” he added.
Oil prices had climbed more than 1% on Monday after the U.S. Department of Transportation’s Maritime Administration advised U.S.-flagged commercial vessels to avoid Iranian territorial waters where possible and to refuse boarding requests from Iranian forces.
Roughly 20% of global oil consumption passes through the Strait of Hormuz, the narrow chokepoint between Oman and Iran, making any escalation in the region a material threat to global energy flows.
Iran and fellow OPEC producers Saudi Arabia, the United Arab Emirates, Kuwait and Iraq ship most of their crude exports through the strait, largely to Asian markets.
The advisory was issued despite comments last week from Iran’s top diplomat, who said nuclear talks with the United States, mediated by Oman, had got off to a “good start” and were set to continue.
Goldman Sachs analysts wrote on Tuesday that geopolitical uncertainty continues to underpin prices, noting increased oil volumes on vessels as buyers seek to secure supplies amid elevated risk.
“While the Oman talks struck a cautiously constructive tone, lingering uncertainty around escalation risks, potential sanctions tightening or supply disruptions in the Strait of Hormuz has preserved a modest risk premium,” said Tony Sycamore, an analyst at IG.
Separately, the European Union has proposed widening sanctions on Russia to cover ports in Georgia and Indonesia that handle Russian oil, according to a document seen by Reuters. The proposal would mark the first time the bloc targets ports in third countries.
The move is part of broader efforts to clamp down further on Russian oil exports, a key source of revenue for Moscow as the war in Ukraine continues.
Meanwhile, traders said Indian Oil Corp purchased six million barrels of crude from West Africa and the Middle East, as India scaled back purchases of Russian oil while pursuing a trade agreement with Washington that both sides aim to finalise in March.
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