Oil Prices Dip as US-Iran Conflict Takes a Diplomatic Turn

Oil prices fell 1% on Tuesday due to a pause in US strikes on Iran, which has raised hope for a diplomatic solution and normalization of Middle East energy flows. Brent crude futures were down $0.54 (0.6%) at $87.82, while U.S. West Texas Intermediate crude was at $81.95 a barrel, down $0.66 (0.8%).

U.S. President Donald Trump said on Monday that the US was having 'good talks' with Iran and that there was a chance of a resolution. However, he stated that US strikes would resume if negotiations failed while Iran issued similar comments about retaliation.

Afrah al-Zouba, Yemen's foreign minister-designate, warned that Houthi fighters aimed to replicate Iran's control of shipping through the Strait of Hormuz at Bab el-Mandeb. Marex analyst Edward Meir noted that a key reason prices weren't higher was demand destruction in Asia.