Oil Prices Drop Amid Hopes for US-Iran Conflict Resolution

Oil prices have dropped to one-week lows as hopes for a resolution in the US-Iran conflict ease concerns about supply disruptions. Both Brent and WTI crude futures slid lower, with Brent down 50 cents at $87.86 and WTI at $82.24.

The price drop comes after US President Donald Trump said Washington was having 'good talks' with Iran, but warned that air strikes would resume if negotiations failed. Iran also issued comments about retaliation, but the situation remains fluid.

Despite the drop in prices, analysts warn that supply disruption risks remain elevated due to tensions in the Strait of Hormuz and the Red Sea. The Caspian Pipeline Consortium's Black Sea terminal has resumed oil loadings after a one-week stoppage following Ukrainian drone attacks.

The subdued flow through the Strait of Hormuz is also weighing on prices, with crude and refined product exports down 50% in the week ended July 24 compared to the previous week, according to Barclays analysts. This decline in exports has contributed to oil prices not being higher than they are now, despite the demand destruction taking place in Asia.