Oil prices edge lower as markets weigh US-Iran mediation efforts

Oil prices fell on July 21 as markets assessed reports of mediation efforts between the United States and Iran alongside fresh attacks between the two countries and threats by Yemen’s Houthis to impose a naval blockade on Saudi Arabia.

Brent crude futures fell 78 cents, or 0.9%, to $88.44 a barrel by 0415 GMT. US West Texas Intermediate (WTI) crude declined 73 cents, or 0.9%, to $82.50 a barrel, while the more actively traded September contract was down 41 cents, or 0.5%, at $82.07 a barrel, Reuters reports.

“There's some hope of de-escalation between the U.S. and Iran. ⁠Reports are that mediators are proposing a 10-day ceasefire, which could put the Memorandum of Understanding (MoU) back on track,” ING analysts said in a note, referring to the June interim deal.

However, the analysts cautioned that reaching an agreement would be difficult because major differences remained between Washington and Tehran. They also noted that US President Donald Trump had warned of retaliation after several US troops were killed.

Meanwhile, US crude oil inventories were expected to have declined last week, along with gasoline stocks, while distillate inventories were projected to have increased, according to a preliminary Reuters poll conducted on July 20.

By Sabina Mammadli