Oil Prices Drop Amid Hopes for Diplomatic Solution to US-Iran Conflict

Oil prices dropped by 1% on Tuesday as investors weighed in on the possibility of a diplomatic solution to the conflict between the US and Iran.

The Brent crude futures contract fell $0.54, or 0.6%, to $87.82 per barrel by 0046 GMT, while U.S. West Texas Intermediate crude was at $81.95 a barrel, down $0.66, or 0.8%.

US President Donald Trump said on Monday that the US was having 'good talks' with Iran and that there was a chance of a resolution, but added that strikes would resume if negotiations failed.

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, which could disrupt global oil flows.