Brent oil prices are poised for a third consecutive month of decline, while WTI is set for a second
Oil prices fell on Tuesday as investors focused on potential US-Iran talks in Doha. Markets are pricing in a reduction in tensions ahead of the US-Iran talks.
The market is poised for a monthly decline as it watches potential US-Iran talks in Doha during a tense temporary ceasefire in the four-month war.
August Brent crude futures, which expire on Tuesday, fell 0.9%, or 64 cents, to $72.51 a barrel as of 03:56 GMT. This is about $20, or 22%, lower than last month's close. The more actively traded September contract fell 0.4%, or 31 cents, to $73.6 a barrel.
The August WTI contract also fell 0.6%, or 39 cents, to $70.36 a barrel. Prices are expected to fall by approximately $17, or 19%, from the May 29 close.
Both Brent and WTI prices have almost returned to their pre-war levels of February 27.
While a true normalization of flows through the Strait of Hormuz is not yet in sight, investors are pricing in the hope of a positive outcome from the Doha talks.
Iranian Deputy Foreign Minister Kazem Gharibabadi said that Iranian and Omani experts will begin talks in the coming days on redefining transit routes through the Strait of Hormuz, and that his country will try to prevent ships from passing outside the defined routes.
However, Iranian Foreign Ministry spokesman Ismail Bagayi stated that no negotiation meetings at any level will be held with the American side in the coming days.
The uncertainty surrounding whether the two sides will meet underscores the fragility of the June 17 ceasefire agreement, which disrupts global oil flows through the Strait of Hormuz and poses a political challenge for Trump ahead of the November congressional elections.
Concerns about Chinese demand are also putting pressure on prices. More data is needed to confirm an increase in Chinese purchases, but we can't yet be sure there will be a major turnaround in the market from the world's largest crude oil importer.
Meanwhile, Middle Eastern producers are continuing to load oil and LNG despite recent attacks on ships in the Strait of Hormuz and renewed clashes between the US and Iran.
Last week, traffic through the Strait reached its highest level since the conflict began at the end of February.
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