Washington, United States. Oil prices fell on Tuesday as markets assessed reports of mediation efforts between the United States and Iran alongside renewed attacks and a Houthi threat to impose a naval blockade on Saudi Arabia.
Brent crude futures fell 96 cents, or 1.1%, to $88.26 a barrel by 0630 GMT. U.S. West Texas Intermediate crude declined 73 cents, or 0.9%, to $82.50 a barrel, while the more active September contract slipped 57 cents, or 0.7%, to $81.91.
Ceasefire proposal
ING analysts said reports of a proposed 10-day ceasefire between the United States and Iran had raised hopes of de-escalation and could put the Memorandum of Understanding linked to the June interim deal back on track.
A senior Iranian official told Reuters that Tehran had received a proposal from mediators for a 10-day ceasefire aimed at salvaging the deal signed on June 17. The agreement was intended to pave the way for a lasting settlement to end the war that began on February 28 with U.S.-Israeli attacks on Iran.
ING said major differences remained between Washington and Tehran, while President Donald Trump had warned of retaliation after several U.S. soldiers were killed.
Renewed attacks and shipping risks
The diplomatic efforts followed another night of U.S. strikes on Iranian cities and attacks by Iran’s Revolutionary Guards on U.S. military assets across the region. U.S. Central Command said later on Monday that it had begun another round of strikes on Iran.
A tanker in the Strait of Hormuz reported being hit by an unknown projectile, prompting its crew to abandon the vessel and board a lifeboat, the United Kingdom Maritime Trade Operations agency said. Vessel crossings through the strait declined further amid growing caution following the latest attacks.
Houthi blockade threat
Yemen’s Iran-aligned Houthis said on Monday they would impose a naval blockade on Saudi Arabia, potentially opening a new front against the United States in its war on Iran and increasing risks to global energy supplies and trade beyond the Gulf.
Tim Waterer, chief market analyst at KCM Trade, said the threat was significant because it raised the possibility of disruption to another major oil exporter.
Inventory expectations
U.S. crude oil stockpiles were expected to have fallen last week along with gasoline inventories, while distillate stocks were likely to have risen, according to a preliminary Reuters poll.