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Oil prices dipped on Tuesday, continuing a downward trend from the previous session as investors awaited clearer indications of progress in restoring crude transport through the Strait of Hormuz following peace negotiations between the U.S. and Iran.
Brent crude futures decreased by 20 cents, or 0.3%, settling at $77.70 per barrel, while U.S. West Texas Intermediate fell 12 cents, or 0.2%, to $73.74 per barrel as of 0323 GMT.
Prices dropped more than 3% on Monday after the United States granted Iran a 60-day waiver on sanctions amid initial peace discussions, coinciding with reports of reduced hostilities in Lebanon under the broader agreement.
”An incremental rise in oil shipments through the Strait of Hormuz is continuing to impact the market,” noted analysts from ING in a report.
Ship-tracking data indicated that two crude tankers carrying nearly 2 million barrels of oil navigated through the Strait of Hormuz on Monday, suggesting an increase in traffic after a decline in flows on Sunday due to concerns over safe passage.
”Recent transit activity appears to have surged, which the market may interpret as a signal for both physical and possibly speculative oil, along with diplomatic advancements,” stated Neil Crosby, head of research at Sparta Commodities.
”It seems we will remain in this bearish yet cautiously optimistic sentiment until a significant change occurs.”
The price drop follows a weekend that raised doubts about the week-old agreement, particularly after U.S. President Donald Trump threatened to resume military action if Iran interfered with shipping through the strategically vital waterway, following Tehran’s declaration of closure.
”There is a prevailing level of skepticism in the market, stemming from longstanding mistrust between Washington and Tehran, indicating that any return to pre-war oil pricing is likely to be postponed rather than immediate,” commented Tim Waterer, chief market analyst at KCM Trade.
In a separate development, analysts surveyed by Reuters anticipate a decline in U.S. crude inventories for the past week, alongside reductions in distillate and gasoline stocks.
Government data released on Monday revealed that U.S. crude reserves in the Strategic Petroleum Reserve fell to 331.2 million barrels last week, marking the lowest level since June 1983 as supply tightens amid ongoing tensions related to the U.S.-Iran conflict.
By: Magdalene Agyeiwaa Sarpong