Oil Prices Drop as US and Iran Await Ceasefire Clarity

Oil prices fell on Monday as investors awaited clarity on US-Iran talks and remained wary about sustained supply losses due to shipping disruptions in the Strait of Hormuz.

The Strait, which carries oil from Iraq, Saudi Arabia, Qatar, Kuwait, and the UAE, remains largely closed after Iranian attacks on shipping. However, some vessels have passed through since Thursday, reflecting Iran's policy to allow passage for friendly nations' ships.

Refiners are seeking alternative sources for crude due to Middle East supply disruptions, leading to spot premiums for US West Texas Intermediate crude reaching all-time highs.

OPEC+ agreed to a modest output rise of 206,000 barrels per day in May but several key producers will struggle to raise output due to the war. Saudi Arabia set its official selling price of May Arab Light crude oil at a record premium of $19.50 above the Oman/Dubai average.