Oil prices dipped on Tuesday and were on track for a monthly decline, with investors closely watching potential US-Iran talks in Doha amid a strained interim ceasefire in the four-month-old conflict. Brent crude futures for August delivery, set to expire on Tuesday, fell 0.9%, or 64 cents, to $72.51 a barrel as of 0356 GMT. These levels are approximately $20, or 22%, lower than last month's closing price. The more actively traded September contract was down 0.4%, or 31 cents, at $73.6 a barrel.
WTI and Brent Near Pre-War Levels
US West Texas Intermediate (WTI) crude for August delivery dropped 0.6%, or 39 cents, to $70.36 a barrel. Prices are set for a decline of around $17, or 19%, from the May 29 closing. Both Brent and WTI prices have nearly returned to pre-war levels seen on February 27, before the conflict began.
Market Optimism Amid Ceasefire Fragility
Investors are pricing in hopes of a positive outcome from the Doha talks, even though a real normalisation of oil flows through the Strait of Hormuz is not yet visible, said Tim Waterer, chief market analyst at KCM Trade. The market is cautiously hopeful but still hedging its bets until more tangible signs of de-escalation emerge, Waterer added.
Iranian and Omani experts are set to begin talks on redefining transit paths through the Strait of Hormuz in the coming days, Iranian Deputy Foreign Minister Kazem Gharibabadi told state TV on Monday. He added that Iran will try to obstruct vessels outside defined paths. However, Iran's Foreign Ministry spokesperson Esmaeil Baghaei stated that there will not be any negotiation meetings at any level with the American side in the coming days.
Uncertainty Over Doha Meeting
The meeting in Doha is going to be perhaps important, perhaps not, US President Donald Trump told reporters in the Oval Office. The uncertainty over whether the two sides would meet highlighted the fragility of a June 17 agreement to pause fighting that has disrupted global oil flows through the Strait of Hormuz and posed a political challenge for Trump ahead of November's congressional elections.
Demand Concerns from China
Weighing further on prices, some analysts expressed concerns about 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.
Middle East Producers Continue Loading Despite Attacks
Meanwhile, Middle East producers are pushing ahead with loading oil and LNG despite fresh ship attacks in the Strait of Hormuz and renewed strikes between the US and Iran in recent days, according to shipping data. Traffic last week hit its highest level since the conflict began at the end of February.
