WTI Crude Tumbles Below $81 as Iran-US Tensions Ease

Oil prices continued to decline on Tuesday as a fourth night passed without any attacks from either Iran or the US. At the time of writing, WTI crude was trading at $80.98 per barrel, down 1.97% on the session, while Brent crude had slipped to $86.80 per barrel, a decline of 1.77%. President Trump's claim that the US is engaged in 'good talks' with Iran may have boosted hopes for a diplomatic resolution between Washington and Tehran.

The US and Iranian officials echoed this sentiment, but both parties have made it clear they are ready to restart hostilities at any point if diplomacy fails. Despite this pullback, oil prices remain elevated due to shipping disruptions in the Middle East, particularly Red Sea traffic concerns as the Houthis attempt to replicate Iran's control over the Strait of Hormuz.

Market analysts are closely watching demand destruction, with $100 oil already hurting consumption. Last week's EIA report showed inventory builds across the board, a sign that demand destruction is kicking in. Markets will be monitoring American Petroleum Institute inventory estimates due out later today to confirm this trend.