REUTERS
Oil prices trended lower on Tuesday following the previous session’s sharp gains as the market remained cautious about progress in US-Iran peace talks.
US President Donald Trump said on Monday talks with Iran were ongoing, while Tasnim news agency reported earlier that Tehran had suspended indirect negotiations with Washington.
Brent crude futures lost 53 cents, or 0.56 percent, to $94.45 a barrel at 0649 GMT, while US West Texas Intermediate fell 56 cents, or 0.61 percent, to $91.60 a barrel.
Both benchmarks rose more than 5 percent in the previous session, having posted a monthly loss of more than 16 percent in May on hopes of a peace deal.
“While markets had hoped to move past the uncertainty amid prospects of a potential deal, nothing appears to have changed for oil as of this morning,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
In an interview with CNBC on Monday, Trump said he did not mind if the talks were over. But shortly after, he issued a social media post saying talks with Iran were continuing and told ABC News that he expected a deal to extend the ceasefire and reopen the Strait of Hormuz “over the next week”.
“The market is currently focused on whether there’s any concrete progress or setbacks in US-Iran negotiations, the tone and substance of statements from both sides (particularly Iran’s threats regarding the Strait of Hormuz), and actual physical tanker movements through the waterway,” said Tim Waterer, chief market analyst at KCM Trade.
The status of the US-Iran negotiations at any given point will ultimately determine whether the current risk premium stays embedded in oil prices or starts to unwind, Waterer added.
Lebanon on Monday announced a partial ceasefire between Hezbollah and Israel, in what would amount to a limited de-escalation of a conflict that has inflamed the broader war with Iran.
Iran has effectively halted nearly all non-Iranian shipping into and out of the Gulf since the war began, choking off about a fifth of global oil and liquefied natural gas flows and driving prices up by 50 percent or more.