Oil prices fell by more than 1% on Tuesday as traders reacted to reports of possible mediation between the United States and Iran aimed at securing a temporary ceasefire, while continuing
military tensions in the Middle East kept markets on edge.
Brent crude futures dropped $1.21, or 1.4%, to $88.01 a barrel by 08:15 GMT. US West Texas Intermediate (WTI) crude futures for August delivery, due to expire on Tuesday, fell 94 cents, or 1.1%, to $82.29 a barrel. The more actively traded September WTI contract declined 95 cents, or 1.2%, to $81.53.
The move lower came after reports that mediators had proposed a 10-day ceasefire between Washington and Tehran, raising hopes that diplomatic efforts could help reduce tensions and revive stalled negotiations.
“There's some hope of de-escalation between the US and Iran,” analysts at ING said in a note. They added that the proposed truce could help put an earlier memorandum of understanding back on track.
However, analysts warned that significant disagreements remain between the two sides. US President Donald Trump has also threatened further action following the deaths of several American soldiers, adding uncertainty over the future of negotiations.
A senior Iranian official told Reuters that Tehran had received a ceasefire proposal from mediators seeking to preserve an agreement reached on 17 June. The deal was intended to open the way towards a longer-term settlement to end the conflict that began on 28 February following US and Israeli strikes on Iran.
Markets were also monitoring wider regional risks, including renewed exchanges of attacks and threats from Yemen’s Houthi movement to impose a naval blockade affecting Saudi Arabia.
Despite the decline in oil prices, investors remain cautious as any escalation in the Middle East could disrupt energy supplies and trigger renewed volatility in global crude markets. Photo by Stacey Harris / Petrol Station, London Road, Leybourne / CC BY-SA 2.0, Wikimedia commons.
