Crude oil prices have fallen as traders assess indications of weakening demand and the limited progress in US-Iran peace talks regarding the reopening of the Strait of Hormuz.
WTI declined by 2.7%, settling above $90 per barrel, while the global benchmark Brent crude closed around $93 per barrel.
Due to geopolitical uncertainty dampening risk appetite, the number of open contracts for both major benchmark futures has shown a declining trend, thereby amplifying price volatility.
Although the Iran-backed Lebanese group Hezbollah rejected a US-mediated Israel-Lebanon ceasefire agreement, US President Donald Trump stated that negotiations with Iran are progressing well.
In a CNN interview, Lebanese President Joseph Aoun stated it is unacceptable for Iran to use Lebanon as a "bargaining chip" in its negotiations with the United States.
Traders are also monitoring signs of demand destruction globally, stemming from higher prices and declining inventories.
Several major energy forecasting agencies have projected that global oil demand growth this year may experience a rare decline.
"Global demand destruction continues to expand," said Dennis Kissler, Senior Vice President at BOK Financial Securities. "Crude oil prices are attempting to find a balance between tightening supply, weakening demand, and the still-high probability of ultimately reaching a peace agreement."
The July delivery contract for WTI fell 2.7% to settle at $90.54 per barrel.
The August delivery contract for Brent fell 2% to settle at $93.09 per barrel.
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