Oil slips as markets weigh uncertain US-Iran talks

Oil prices eased on Tuesday, June 30, and were on track for a monthly decline, as investors weighed the prospects of potential U.S.-Iran talks in Doha against the fragility of a ceasefire in the four-month-old conflict.

Brent crude futures for August delivery, which expire on Tuesday, fell 0.9%, or 64 cents, to $72.51 a barrel as of 0356 GMT. That places prices roughly $20, or 22%, below last month’s close. The more actively traded September Brent contract declined 0.4%, or 31 cents, to $73.60 a barrel, as per figures obtained by Reuters.

U.S. West Texas Intermediate (WTI) crude for August delivery dropped 0.6%, or 39 cents, to $70.36 a barrel, putting it on course for a decline of about $17, or 19%, compared with its May 29 closing level.

Both Brent and WTI benchmarks have now retreated to near pre-war levels last seen on February 27.

"Investors are pricing in hopes of a positive outcome from the Doha talks, even though real normalisation of flows through the Strait of Hormuz is not yet visible," said Tim Waterer, chief market analyst at KCM Trade.

"The market is cautiously hopeful but still hedging its bets until we see more tangible signs of de-escalation," Waterer added.

Market sentiment has been influenced by expectations of diplomatic engagement, although signals from Tehran remain mixed. Iranian Deputy Foreign Minister Kazem Gharibabadi said on Monday, June 29, that Iranian and Omani experts would soon begin discussions on redefining transit routes through the Strait of Hormuz, adding that Iran would seek to block vessels operating outside designated paths.

However, Iran’s Foreign Ministry spokesperson Esmaeil Baghaei said there would be no negotiation meetings at any level with the United States in the coming days, casting doubt on the likelihood of imminent talks.

"The meeting in Doha is going to be perhaps important, perhaps not. We're going to find out," U.S. President Donald Trump told reporters in the Oval Office.

The uncertainty surrounding potential negotiations underscores the fragility of a June 17 agreement to pause hostilities, which had disrupted global oil flows through the Strait of Hormuz and created political pressure for Trump ahead of November’s congressional elections.

Additional downward pressure on prices has come from concerns about demand in China, the world’s largest crude importer.

"We wait for more evidence of a rise in Chinese buying but cannot yet bet on a big return to the market from the world’s largest crude importer," said Neil Crosby, head of research at Sparta Commodities.

Meanwhile, Middle Eastern producers have continued loading oil and liquefied natural gas cargoes despite renewed ship attacks in the Strait of Hormuz and fresh exchanges of strikes between the United States and Iran in recent days, according to shipping data.

Maritime traffic through the strait rose last week to its highest level since the conflict began at the end of February.

By Tamilla Hasanova