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Summary:

– Oil prices were little changed as investors watched U.S.-Iran diplomatic efforts and the fragile ceasefire.

– Brent and WTI crude were on track for their biggest monthly and quarterly declines since early 2020.

– Analysts cited growing supply expectations and easing geopolitical concerns as factors weighing on prices.

Oil prices were little changed on Tuesday but were headed for their biggest monthly and quarterly losses since the COVID-19 pandemic in early 2020, with investors eyeing potential U.S.-Iran talks in Doha amid a strained interim ceasefire in the four-month-old war.

Brent futures rose 3 cents to $73.18 a barrel at 10:51 a.m. EDT (1451 GMT), while U.S. West Texas Intermediate (WTI) crude fell 30 cents, or 0.4%, to $70.45 a barrel.

Both crude benchmarks were close to where they were trading on February 27, the day before the start of the U.S.-Israeli war on Iran, when Brent closed at $72.48 a barrel and WTI closed at $67.02.

“I wouldn’t say the market has priced out a risk premium, but previously stranded ships have become available with the increase in ships moving out of the Gulf, creating a temporary wave of new supply,” UBS analyst Giovanni Staunovo said.

Morgan Stanley said it now models an implied global oil market surplus of 4.8 million barrels per day in 2027.

Top U.S. envoys who have arrived in Doha will not hold a high-level meeting with Iran, a Qatari official said on Tuesday, casting doubt on the progress of efforts to bring a lasting halt to the Iran war and fully reopen the Strait of Hormuz. About 20% of global oil supplies passed through the strait before the Iran war.

Instead, there will be technical talks this week on issues including regional security that could later be elevated to senior level, Qatar‘s Foreign Ministry spokesperson Majed Al Ansari told a media briefing.

The arrival of U.S. President Donald Trump‘s son-in-law Jared Kushner and envoy Steve Witkoff in Doha on Tuesday followed exchanges of fire over the weekend that tested the June 17 interim accord between the United States and Iran.

The 14-point pact allowed 60 days for the two sides to negotiate a permanent truce in the conflict and to resolve thorny issues including the future of Iran’s nuclear programme.

Futures milestones

Both crude benchmarks remained technically oversold Tuesday, Brent for 13 straight days, WTI for 11. Brent’s premium over WTI fell to $2.14 a barrel, its lowest since May 2022, a level analysts say discourages U.S. crude exports.

Brent fell about 21% in June after a 19% drop in May, its steepest monthly decline since March 2020. For the quarter, Brent dropped about 38% after surging 94% in the first quarter.

Markets awaited weekly inventory data from the API and EIA. Analysts estimated a 4.1 million-barrel draw for the week ended June 26, which would mark 10 consecutive weeks of inventory declines, tying a record set in January 2018.