Oil prices moved lower during Asian trading on Tuesday as investors assessed the possibility of renewed talks between the United States and Iran.
However, concerns about supply disruptions remained after the two countries exchanged fresh military strikes over the weekend.
At 02:03 ET, or 06:03 GMT, U.S. WTI crude futures fell 0.8% to $70.21 per barrel.
Brent crude futures declined 1.2% to $72.26 per barrel.
U.S.-Iran Tensions Keep Oil Markets Cautious
Oil traders remained focused on geopolitical developments in the Middle East.
Washington and Tehran exchanged new attacks during the weekend, increasing concerns about oil shipments through the Strait of Hormuz.
U.S. President Donald Trump said the two sides were expected to hold peace talks in Doha later on Tuesday.
However, Iran had not formally confirmed its participation, leaving uncertainty over whether the negotiations would take place.
Strait of Hormuz Remains a Major Supply Risk
Iran’s Deputy Foreign Minister Kazem Gharibabadi said Tehran would continue pursuing plans to jointly oversee maritime traffic through the Strait of Hormuz.
He added that Iran could move forward even if Oman decided not to participate.
The comments increased uncertainty surrounding the future management of the strategic shipping route.
ANZ analysts said greater Iranian control over traffic could slow the recovery of crude exports from the Persian Gulf.
Continued risks to shipping also remain a threat to the region’s oil supply outlook.
Crude Prices Remain Below Recent Peaks
Oil prices closed higher on Monday after recovering from the sharp decline recorded during the previous week.
Despite that rebound, both Brent and WTI crude remain more than 9% below their recent highs.
Prices have returned toward levels seen before the conflict involving the United States, Israel and Iran intensified.
Hormuz Carries a Major Share of Global Energy Supply
Before the latest conflict, around one-fifth of global crude oil and liquefied natural gas shipments moved through the Strait of Hormuz.
Any disruption to traffic through the waterway could therefore have a significant effect on global energy markets.
This risk continues to provide some support for oil prices, even as expectations of diplomatic progress reduce the geopolitical premium.
Refined Fuel Markets Remain Tight
ANZ analysts said crude prices have surrendered most of the gains caused by the conflict.
However, refined fuel markets remain relatively tight, suggesting that underlying supply pressures have not disappeared.
Fuel prices have remained firmer than benchmark crude prices.
This difference could continue to support refinery profit margins, even if Brent and WTI prices remain subdued.
