Oil Prices Extend Losses as U.S.-Iran Pause Hostilities

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Oil prices.

Oil prices extended their decline on Tuesday, falling by more than $1 a barrel as a pause in hostilities between the United States and Iran fuelled hopes of a diplomatic resolution to the conflict, easing concerns over disruptions to global energy supplies.

According to Reuters, Brent crude futures were down $1.47, or 1.66%, at $86.89 by 0326 GMT, their lowest since July 20. U.S. West Texas Intermediate crude was at $81.16 a barrel, down $1.45, or 1.76%, also the lowest level since July 20. Both contracts slid around 8% in the prior session after the U.S. abruptly suspended a campaign of air strikes against Iran over the weekend.

U.S. President Donald Trump said on Monday that the United States was holding "good talks" with Iran and that there was a chance of reaching a resolution. However, he warned that U.S. military strikes would resume if negotiations failed, while Iranian officials issued similar warnings of retaliation.

Afrah al-Zouba, the foreign minister-designate of Yemen's internationally recognised, Saudi-backed government, said the Iran-aligned Houthi movement was seeking to replicate Tehran's control over shipping through the Strait of Hormuz by asserting influence over the Bab el-Mandeb Strait.

Oil prices also came under pressure after the Caspian Pipeline Consortium resumed crude oil loadings at its Black Sea terminal on Russia's coast, following a week-long suspension caused by Ukrainian drone attacks.

Separately, the Houthis in Yemen said they had targeted Saudi Arabia's East-West Pipeline, which transports crude oil to the Red Sea port of Yanbu, in retaliation for what they described as Saudi drone incursions.

Meanwhile, a preliminary Reuters poll indicated that U.S. crude oil inventories likely declined last week, alongside gasoline stocks, while distillate inventories were expected to have increased.



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