Oil prices moved lower on Tuesday and remained on course for a steep monthly decline as traders assessed the chances of renewed diplomatic engagement between the United States and Iran, while continuing to monitor tensions around the Strait of Hormuz.
Brent crude futures for August fell 64 cents, or 0.9 percent, to $72.51 a barrel during early trading. The more actively traded September contract slipped 31 cents, or 0.4 percent, to $73.60 a barrel.
US West Texas Intermediate crude for August also declined, falling 39 cents, or 0.6 percent, to $70.36 a barrel.
The latest losses leave both global benchmarks close to the levels seen before the conflict between the US and Iran began in late February. Brent is set to end the month about $20, or 22 percent, below its closing level at the end of May, while WTI is on track to lose around $17, or 19 percent, over the same period.
Market participants are closely following reports of possible talks in Doha, although uncertainty remains over whether any direct discussions between Washington and Tehran will actually take place.
Tim Waterer, chief market analyst at KCM Trade, said investors were becoming more hopeful that diplomatic efforts could reduce tensions, even though there has been little evidence that oil shipments through the Strait of Hormuz have fully returned to normal.
He said markets were cautiously optimistic but remained unwilling to abandon risk concerns until there were clearer signs that the situation had improved.
Iranian Deputy Foreign Minister Kazem Gharibabadi said experts from Iran and Oman would soon begin discussions on redefining shipping routes through the Strait of Hormuz. He added that Iran would seek to prevent vessels from travelling outside the designated routes.
However, Iran’s Foreign Ministry spokesperson Esmaeil Baghaei rejected reports of imminent negotiations with the United States, saying no meetings with American officials were planned in the coming days.
US President Donald Trump also offered no certainty over the prospects for talks, telling reporters that any meeting in Doha “may be important, may not,” leaving markets unsure whether diplomatic progress was likely.
The mixed signals have highlighted the fragile nature of the ceasefire reached on June 17 after months of conflict that disrupted one of the world’s most important oil transit routes.
At the same time, concerns over weaker demand from China continued to weigh on market sentiment. Neil Crosby, head of research at Sparta Commodities, said traders were still waiting for stronger evidence that Chinese buyers were returning to the market before expecting a sustained recovery in prices.
Despite the ongoing security risks, oil and liquefied natural gas exports from the Middle East have continued, with shipping data showing producers pressing ahead with cargo loadings. Vessel traffic through the Strait of Hormuz also reached its highest level last week since the conflict began, suggesting energy flows have remained more resilient than many traders had feared.
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