Oil prices fell on Tuesday as markets balanced reports of renewed diplomatic efforts between the United States and Iran with continued military escalation and fresh threats to global energy supplies.
Brent crude dropped to $88.44 a barrel after easing by 78 cents or 0.9 per cent, while U.S. West Texas Intermediate crude fell to $82.50 per barrel down 73 cents or 0.9 per cent.
Analysts said reports that mediators had proposed a 10-day ceasefire between Washington and Tehran raised hopes of easing tensions and reviving the 17 June Memorandum of Understanding (MoU) aimed at reaching a longer-term agreement.
However, significant differences remain between the two sides. U.S. President Donald Trump has also warned of retaliation after several American troops were killed, limiting expectations for a rapid breakthrough.
A senior Iranian official told Reuters that Tehran had received the ceasefire proposal as mediators sought to salvage the agreement. The diplomatic efforts came after another night of U.S. strikes on Iranian cities and attacks by Iran's Revolutionary Guards (IRGC) on U.S. military assets across the region.
Later on Monday, U.S. Central Command said it had launched another round of strikes on Iran.
Shipping risks also remained in focus. The United Kingdom Maritime Trade Operations (UKMTO) said a tanker transiting the Strait of Hormuz was struck by an unknown projectile, forcing its crew to abandon the vessel and take to a lifeboat. Traffic through the strategic waterway has continued to decline amid rising security concerns.
At the same time, Yemen's Iran-aligned Houthis announced plans to impose a naval blockade on Saudi Arabia, potentially increasing risks to global oil supplies and trade.
Analysts said the threat to Saudi shipping adds to concerns over disruptions affecting one of the world's largest oil exporters.
Meanwhile, a Reuters poll showed U.S. crude and gasoline inventories were expected to have declined last week, while distillate stockpiles likely increased.
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Flights at Catania airport in Sicily will remain suspended until early Friday as ash from Mount Etna continues to disrupt air travel, following hundreds of cancellations and diversions over the past week.
Hundreds of flights have been cancelled or rerouted at Catania Airport over the past week as ash from Mount Etna’s ongoing eruption continues to disrupt air travel in Sicily.
Iran says the Strait of Hormuz remains under its control, rejecting U.S. President Donald Trump’s claim of “total control” over the strategic waterway and insisting it will not reopen until Washington fulfils its commitments under an interim deal.
The U.S. will impose unprecedented measures on Iran in order to economically isolate the country, U.S. Treasury Secretary Scott Bessent has said.
Iran and the United States remain at loggerheads over efforts to agree a permanent end to the war in the Gulf, according to a senior Iranian source who said there had been no progress in talks to revive the interim deal agreed in June and define a timeframe to implement it.
The U.S. will impose unprecedented measures on Iran in order to economically isolate the country, U.S. Treasury Secretary Scott Bessent has said.
Iran says the Strait of Hormuz remains under its control, rejecting U.S. President Donald Trump’s claim of “total control” over the strategic waterway and insisting it will not reopen until Washington fulfils its commitments under an interim deal.
Iran and the United States remain at loggerheads over efforts to agree a permanent end to the war in the Gulf, according to a senior Iranian source who said there had been no progress in talks to revive the interim deal agreed in June and define a timeframe to implement it.
Iran said it was nearing a final pact with Oman defining new shipping lanes between them through the Strait of Hormuz but repeated that the U.S. must meet other conditions.
A deal on a new route for vessels through the Strait of Hormuz is "very close," Iranian Foreign Minister Abbas Araghchi has said, while warning that the reopening of the waterway depends on the U.S. meeting other conditions, including paying compensation to Iran.
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