Oil Prices Paralyzed by Strait of Hormuz Talks
Oil prices pared gains on Tuesday after hitting their highest levels in over a week due to signs of progress in talks between Oman and Iran over shipping through the Strait of Hormuz. The developments are seen as a potential de-escalation of tensions, which could negatively impact oil prices.
Brent crude futures fell 21 cents, or 0.24%, to $87.51 a barrel by 1138 GMT, while U.S. West Texas Intermediate (WTI) crude futures were down 4 cents, or 0.05%, at $82.09.
Both benchmarks had jumped over 5% on Monday after U.S. President Donald Trump responded to Iran's conditions for a peace deal with his own demands that Iran pay compensation for people killed in wars, attacks, and protests.
Fawad Razaqzada, analyst at City Index and FOREX.com, warned that any signs of de-escalation or a deal would be bad news for oil prices. He stated, 'I don't see oil going below $80 any time soon, unless there's a surprise announcement of a deal that reopens the Strait of Hormuz, because the oil market is tightening.'
The geopolitical risk continues as shipping data showed traffic through the Strait of Hormuz dropped to six vessels on Monday, compared with a 10-day average of about 11 vessels.