Oil prices dip amid uncertainty over US-Iran peace talks

Oil prices edged lower on Tuesday as investors remained cautious over the outcome of ongoing negotiations between the United States and Iran, despite indications that diplomatic efforts between the two countries are continuing.

Brent crude futures fell by 53 cents, or 0.56 per cent, to $94.45 per barrel, while U.S. West Texas Intermediate (WTI) crude declined by 56 cents, or 0.61 per cent, to $91.60 per barrel in early trading.

The decline followed a strong rally in the previous session, when both benchmarks gained more than five per cent.

However, oil prices had still recorded losses of over 16 per cent in May amid expectations that a peace agreement could ease tensions in the Middle East.

The market’s focus remains firmly on the status of U.S.-Iran negotiations after President Donald Trump offered mixed signals on the talks.

While he suggested during a CNBC interview that he would not be concerned if discussions ended, he later stated on social media that negotiations were still underway.

Trump also told ABC News that he expected a deal capable of extending the ceasefire and reopening the Strait of Hormuz within the next week.

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Analysts said traders were waiting for clearer signs of progress before making major moves.

A senior market analyst at Phillip Nova, Priyanka Sachdeva, noted that hopes of a breakthrough had yet to remove uncertainty from the oil market.

Similarly, a Chief Market Analyst at KCM Trade, Tim Waterer, said investors were closely monitoring developments in the negotiations, including statements from both Washington and Tehran, as well as shipping activity through the Strait of Hormuz.

According to Waterer, the direction of the talks will determine whether the geopolitical risk premium currently supporting oil prices remains in place or gradually fades.

The market also reacted to reports from Lebanon, where the government announced a partial ceasefire between Hezbollah and Israel, raising hopes of a limited de-escalation in a conflict linked to the broader regional tensions involving Iran.

Since the outbreak of hostilities, Iran has significantly disrupted non-Iranian shipping through the Gulf, affecting nearly a fifth of global oil and liquefied natural gas supplies and contributing to sharp increases in energy prices.