Oil dips on renewed uncertainty between Washington, Tehran

Oil prices declined on Tuesday, June 2, after a sharp rally in the previous session, as markets continued to grapple with uncertainty surrounding negotiations between the United States and Iran, according to Reuters.

Brent crude futures fell 0.79% to $94.23 per barrel as of 08:34, while West Texas Intermediate (WTI) dropped 0.92% to $91.31 per barrel.

Both benchmarks had risen more than 5% in the previous session, although they had earlier lost over 16% in May amid expectations of a potential peace agreement.

US President Donald Trump said on June 1 that talks with Iran were ongoing, while Iranian news agency Tasnim News Agency reported a suspension of indirect contacts with Washington.

“While markets had hoped to move past the uncertainty amid prospects of a ⁠potential deal, nothing appears to have changed for oil as of this morning,” Priyanka Sachdeva, senior market analyst at ​Phillip Nova, noted.

In a CNBC interview, Trump also said he would not object to ending negotiations, but later clarified on social media that dialogue was continuing and expressed expectations of an agreement to extend a ceasefire and resume operations in the Strait of Hormuz “over the next week.”

Analysts say the key driver for oil markets remains tangible progress in US–Iran negotiations, as well as developments around the Strait of Hormuz and global supply flows.

By Jeyhun Aghazada