Oil prices edged lower on Tuesday as investors assessed the possibility of renewed diplomatic talks between the United States and Iran while continuing to monitor supply risks following the latest military tensions between the two countries.
At 04:56 ET (08:56 GMT), Brent crude futures, the international benchmark, fell 0.6% to US$72.69 a barrel, while West Texas Intermediate (WTI) crude declined 0.5% to US$70.41 a barrel.
Hormuz developments remain in focus
Energy markets remained cautious after reports that Washington and Tehran had contained a renewed flare-up in the Strait of Hormuz, helping preserve the interim peace agreement reached earlier this month.
Crude prices have retreated sharply since the memorandum of understanding was announced and have now returned to levels seen before the conflict.
President Donald Trump said the two countries are expected to resume peace negotiations in Doha later on Tuesday. However, Iranian officials have yet to confirm that further talks with the United States will take place this week, leaving uncertainty over both the diplomatic process and the security outlook for the Strait of Hormuz.
Shipping risks continue to cloud supply outlook
White House officials have maintained that tanker traffic through the Strait of Hormuz, which handles around one-fifth of global oil supplies, has resumed normally.
Iran’s Deputy Foreign Minister Kazem Gharibabadi, however, said Tehran intends to continue pursuing plans to jointly oversee maritime traffic through the strategic waterway even if neighbouring Oman ultimately decides not to participate.
Analysts at ANZ said the prospect of increased Iranian oversight could slow the recovery in crude exports from the Persian Gulf, adding that ongoing shipping risks continue to create uncertainty around regional supply.
Refining margins remain supported
ANZ analysts also noted that while crude oil has surrendered most of the gains generated during the recent conflict, refined fuel markets remain comparatively tight, indicating that supply constraints persist further along the energy supply chain.
The divergence between softer crude prices and firmer refined fuel markets suggests refinery margins are likely to remain well supported even if benchmark oil prices remain subdued.