Oil prices edged lower on Wednesday, surrendering part of the previous session’s rally as traders assessed the outlook for negotiations between Washington and Tehran after renewed military clashes complicated attempts to restore shipping through the Strait of Hormuz.
Brent crude futures dropped $1.52, or 1.53%, to $98.06 per barrel by 06:33 GMT, while U.S. West Texas Intermediate crude fell $1.90, or 2.02%, to $91.99 a barrel.
The market had rallied sharply on Tuesday after fresh U.S. strikes in Iran weakened expectations that the two countries were close to securing an agreement to end the conflict.
Tehran accused Washington of violating the ceasefire with attacks near the Strait of Hormuz, although the United States insisted its military response was defensive.
Regional tensions intensified further after Israel expanded airstrikes in Lebanon on Tuesday, adding another obstacle to diplomatic negotiations.
Following the ceasefire reached in April after three months of fighting, both sides had pointed to progress in talks over reopening the Strait of Hormuz, one of the world’s most important routes for oil and gas transportation. However, the latest escalation has cast uncertainty over whether those negotiations can continue successfully.
Despite the renewed tensions, reports that several LNG carriers have recently crossed the strait improved sentiment among traders, raising hopes that the critical shipping corridor may reopen sooner than expected and help ease pressure on global energy supplies.
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