Oil drops despite ongoing tensions in the Strait of Hormuz
Photo: Oil prices fall despite ongoing risks in the Strait of Hormuz (Getty Images)
Global oil prices fell on Tuesday as investors looked ahead to possible US-Iran talks in Doha, while the fragile ceasefire in the region remains at risk of collapsing, according to Reuters.
How much oil prices have fallen
Brent crude for August delivery dropped 0.9% to $72.51 per barrel, about 22% below last month's closing level.
West Texas Intermediate (WTI) fell 0.6% to $70.36 per barrel, around 19% below its May 29 closing price. Both benchmark crude grades have nearly returned to their pre-war levels of February 27.
What analysts say
"Investors are pricing in hopes of a positive outcome from the Doha talks, even though real normalisation of flows through the Strait of Hormuz is not yet visible," said Tim Waterer, chief market analyst at KCM Trade.
Oil prices are also under pressure because of uncertainty surrounding demand from China.
"We wait for more evidence of a rise in Chinese buying but cannot yet bet on a big return to the market from the world’s largest crude importer," said Neil Crosby, head of research at Sparta Commodities.
Doha talks remain uncertain
Iranian Deputy Foreign Minister Kazem Gharibabadi said Iranian and Omani experts will begin talks in the coming days on transit routes through the Strait of Hormuz.
At the same time, Iranian Foreign Ministry spokesperson Esmaeil Baghaei said no talks between Iran and the United States are scheduled in the coming days.
"The meeting in Doha is going to be perhaps important, perhaps not. We're going to find out," US President Donald Trump told reporters.
The uncertainty highlights the fragility of the ceasefire reached on June 17. Despite heightened security risks, Middle Eastern producers continue exporting oil and liquefied natural gas.
Meanwhile, according to the US Central Command, commercial shipping through the Strait of Hormuz remains open.
Earlier in June, oil prices also declined after the United States announced an agreement with Iran.
At that time, hopes that the Strait of Hormuz would remain open pushed both Brent and WTI to their lowest levels since March 10.
