Crude oil futures traded lower on Tuesday morning as the US and Iran continued their peace talks in Switzerland.
At 9.23 am on Tuesday, September Brent oil futures were at $77.21, down by 0.40 per cent, and August crude oil futures on WTI (West Texas Intermediate) were at $73.63, down by 0.31 per cent. July crude oil futures were trading at ₹6999 on Multi Commodity Exchange (MCX) during the initial hour of trading on Tuesday against the previous close of ₹6983, up by 0.23 per cent, and August futures were trading at ₹6962 against the previous close of ₹6953, up by 0.13 per cent.
In their Commodities Feed for Tuesday, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said oil prices came under further pressure on Monday, with ICE Brent settling 3.3 per cent lower. The gradual increase in oil flows through the Strait of Hormuz continues to weigh on the market, while positive signals from US-Iran talks in Switzerland have weighed on sentiment.
The real downward price pressure came on Monday from the US issuing a 60-day licence, which allows Iran to export oil. While the market sold off on this development, it shouldn’t be too surprising. This was one of the conditions in the US-Iran memorandum of understanding. Iran had already started ramping up exports following the lifting of the US blockade. This sanctions waiver will open more markets for Iran to sell its oil, including the US, they said.
“Looking ahead, the key uncertainty remains how quickly oil flows through the Strait of Hormuz can normalise. Obviously, this depends on how quickly upstream oil production in the Persian Gulf can return. While the consensus is that this normalisation will take months rather than weeks, price action in the oil market suggests a more rapid recovery. Clearly, the evolution of US-Iran talks will be crucial to how quickly energy flows resume. As we’ve seen in recent days, the ceasefire remains fragile. There’s a very real risk of a further flare-up in tensions,” they added.
Meanwhile, a Truth Social post by US President Donald Trump said: “Everybody is fully aware that Iran will agree to have Major Weapons Inspections in order to ensure “Nuclear Honesty” long into the future.”