Following a call from U.S. President Donald Trump, Iran and Israel indicated they have ceased reciprocal attacks, prompting a decline in oil prices on Tuesday that erased much of the prior session's gains, though both sides cautioned that hostilities could resume.
As of 07:41 GMT, Brent crude futures fell by $1.33, or 1.4%, to $92.92 per barrel, while U.S. West Texas Intermediate crude futures dropped $1.73, or 1.9%, slipping below the $90 per barrel mark.
Tamas Varga, an analyst at PVM Oil Associates, noted that the market has seen similar scenarios before—expectations for an end to hostilities that would conclude three months of conflict in the Middle East.
Nevertheless, with a lack of other market drivers, oil prices declined after Iran and Israel announced the halt in their mutual strikes. Over the weekend, renewed Israeli strikes on Iran and attacks in Lebanon had fueled a 5% surge in prices on Monday.
Varga added, "At the same time, global oil inventories continue to draw down. As weekly or monthly data is released, the reality of perilously low global stock levels could intensify the scramble for available crude, potentially driving Brent prices back above $100 per barrel."
Tehran continues to block most shipping through the Strait of Hormuz, a pre-war conduit for one-fifth of the world's crude oil and liquefied natural gas shipments. Washington has also imposed its own blockade on Iranian ports.
The U.S. military stated on Monday that American forces intercepted an empty tanker in the Gulf of Oman that day, as it attempted to sail to an Iranian port in violation of the current blockade.
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