LONDON: Oil prices edged lower on Tuesday, falling for a second session, as markets weighed the possibility of a de-escalation in US-Iran tensions, while a firmer US dollar added pressure.
Brent crude futures fell 15 cents to $66.15 a barrel by 10:16 GMT, while US West Texas Intermediate crude slipped 8 cents to $62.06 a barrel. Earlier in the session, Brent and WTI touched their lowest levels in a week at $65.19 and $61.12 a barrel, respectively.
Oil prices slumped more than 4% on Monday after US President Donald Trump said Iran was “seriously talking” with Washington, signalling a possible easing of tensions with the OPEC member.
Iran and the United States are expected to resume nuclear talks on Friday in Türkiye, officials from both sides said. Trump warned that with large US warships heading towards Iran, “bad things could happen” if a deal was not reached.
Iranian President Masoud Pezeshkian said talks with Washington should be pursued to secure Iran’s national interests, provided “threats and unreasonable expectations” are avoided.
“The volatile price action seen over the past four weeks has been driven by geopolitical risk premiums linked to the current US administration’s expansionary foreign policy, especially the ‘on-off’ threats towards Iran”, said Kelvin Wong, senior market analyst at OANDA.
Adding further pressure, the US dollar index hovered near its highest level in more than a week, making dollar-denominated crude more expensive for holders of other currencies.
Investors also assessed global supply conditions. Russian Deputy Prime Minister Alexander Novak said Russia has sufficient fuel volumes and is even running a surplus, adding that the domestic oil products market stabilised last autumn.
On Monday, Trump announced a trade deal with India that cuts US tariffs on Indian goods to 18% from 50% in exchange for New Delhi halting purchases of Russian oil and lowering trade barriers.
“If this happens, it could lead to an increase in the amount of Russian oil floating at sea”, ING analysts said in a note.
Trump said India had agreed to buy oil from the United States and possibly Venezuela.
Analysts expect prices to remain volatile in the near term. “Prices are likely to stay choppy and range-bound, reacting to headlines and macroeconomic cues rather than forming a decisive trend, with risks skewed to the downside”, said Priyanka Sachdeva, senior market analyst at Phillip Nova. — Reuters
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