Oil prices ease on Tuesday

Oil prices edged lower on Tuesday, hovering near one-week lows as hopes for a diplomatic resolution between the United States and Iran eased market concerns, although subdued oil flows through the Strait of Hormuz and ongoing supply risks limited losses.

Brent crude futures fell 50 cents, or 0.57 per cent, to $87.86 a barrel by 0610 GMT, while US West Texas Intermediate (WTI) crude slipped 37 cents, or 0.45 per cent, to $82.24. Both benchmarks had plunged around 8 per cent in the previous session after the United States suspended its air strike campaign against Iran over the weekend.

US President Donald Trump said Washington was holding “good talks” with Iran and that a resolution was possible, although he warned military action could resume if negotiations fail.

Analysts said easing geopolitical tensions had reduced fears of supply disruptions, but warned the situation remains volatile. Oil flows through the Strait of Hormuz remained well below normal levels, while security risks in the Red Sea persisted following attacks involving Iran-backed Houthi forces.

Meanwhile, the resumption of oil loadings at the Caspian Pipeline Consortium’s Black Sea terminal after a week-long suspension also weighed on prices.

A preliminary Reuters poll indicated US crude oil inventories likely declined last week, while gasoline stocks also fell and distillate inventories increased.

Attribution: Reuters