Live updates: Follow the latest news on US-Iran war
Oil prices slid further on Tuesday, with Brent retreating by more than 6 per cent, adding to losses in recent days as negotiations between the US and Iran gained traction.
The decline also comes shortly after Israeli Prime Minister Benjamin Netanyahu visited Washington
Crude, which erased all of its wartime gains in the first week of July, quickly shot back up as the US and Iran renewed hostilities shortly thereafter.
The conflict intensified after Yemen’s Houthi rebels struck Saudi oil tankers in the Red Sea last week, causing Brent last Thursday to top $100 a barrel for the first time since the end of May. The rebels had earlier announced a “maritime embargo” against Riyadh, blocking the key Bab Al Mandeb.
US-Iran strikes stopped before the end of last week, although Tehran had warned attacks could resume if Washington continued with its wave of military strikes.
US President Donald Trump said Washington and Tehran were holding discussions with a possibility of an agreement, but warned America would resume military action if diplomacy failed.
Mr Trump said Mr Netanyahu was trying to keep him involved in the war, which marked its five-month point on Tuesday. The US leader is also set to host Ukrainian President Volodymyr Zelenskyy at the White House.
Brent, the gauge for two thirds of the world's oil, was down 6.27 per cent to $82.82 a barrel at 8.48pm UAE time. West Texas Intermediate, the gauge that tracks US crude, slipped 5.42 per cent to $78.13 per barrel.
Since the conflict reignited earlier this month, through last Thursday's peak Brent jumped nearly 40 per cent, while WTI surged 34 per cent – but both have since retreated by about 16 per cent.
The shifting geopolitical situation is causing crude oil prices to swing wildly, making it harder to predict.
But Norbert Rucker, head of economics and next-generation research at Julius Baer, said analysis at the Swiss bank shows “confidence that prices will follow the usual geopolitical pattern and that the current spike will prove short-lived”.
Additionally, the focus of contacts between the US and Iran has widened to include the Houthi blockade of the Red Sea, a Pakistani source privy to the negotiations told The National.
The renewed exchange of messages does not mean a permanent end is in sight for the US-Iran war. But that diplomacy remains alive is a ray of hope, the source said. They believe each side will want an agreement, allowing them to frame themselves as the winner.
