Oil prices fell in early Asian trade on Tuesday amid signs of potential U.S.-Iran dialogue to end the war.<\/p>\n
Angus Mordant | Reuters<\/p>\n
Oil\u00a0prices fell in early Asian trade on Tuesday as signs of potential U.S.-Iran dialogue to end their war reduced concerns about supply risks stemming from the U.S. blockade of the Strait of Hormuz.<\/p>\n
Brent futures<\/a>\u00a0declined by $1.86, or 1.87%, to $97.50, while U.S. West Texas Intermediate (WTI)\u00a0crude<\/a> fell $2.25, or 2.27%, to $96.83 by 0003 GMT.<\/p>\n Both benchmarks had risen in the previous session, with Brent climbing more than 4% and WTI nearly 3%, after the U.S. military began a\u00a0blockade\u00a0of Iran’s ports.<\/p>\n The\u00a0U.S. military said\u00a0on Monday that its blockade of the Strait of Hormuz would extend east to the Gulf of Oman and Arabian Sea, while ship-tracking data showed two ships turned around in the strait as the blockade went into effect.<\/p>\n Iran, in response, threatened to target ports in Gulf-bordering nations following the collapse of weekend talks in Islamabad aimed at resolving the crisis.<\/p>\n “Despite the breakdown of peace talks in Pakistan over the weekend, Trump has managed to take some steam out of the\u00a0oil\u00a0price again dangling carrot of a possible deal,” said Tim Waterer, chief market analyst at KCM Trade.<\/p>\n Sources familiar with the negotiations said\u00a0dialogue\u00a0between Iran and the U.S. was still alive, while Pakistani Prime Minister Shehbaz Sharif affirmed ongoing efforts to de-escalate tensions. Trump said on Monday that Iran\u00a0“wants to make a deal”.<\/p>\n ANZ analysts\u00a0estimate\u00a0that about 10 million barrels per day of crude supply have been effectively removed from the market, adding that a prolonged U.S. blockade could curb an additional 3 million to 4 million bpd of crude shipments.<\/p>\n “The\u00a0oil\u00a0market no longer needs a worst-case escalation to justify higher pricing levels. Tight balances alone are sufficient to sustain the price of Brent near or above recent threshold levels,” ANZ said in a client note.<\/p>\n NATO allies, including Britain and France,\u00a0refrained\u00a0from joining the blockade, advocating instead for reopening the vital waterway.<\/p>\n U.S. Energy Secretary Chris Wright\u00a0suggested\u00a0oil\u00a0prices could peak in “the next few weeks” once shipping resumes through the Strait of Hormuz.<\/p>\n The International Monetary Fund, the World Bank, and the International Energy Agency\u00a0urged countries\u00a0to avoid hoarding energy supplies or imposing export curbs amid what they described as the most significant shock ever to the\u00a0global\u00a0energy market.<\/p>\n IEA chief Fatih Birol\u00a0said\u00a0on Monday that while further strategic\u00a0oil\u00a0releases might not yet be necessary, the agency remains prepared to act if needed.<\/p>\n Meanwhile, the Organization of the Petroleum Exporting Countries\u00a0scaled back\u00a0its second-quarter\u00a0global\u00a0demand forecast by 500,000 bpd in its latest monthly report.<\/p>\n