Oil prices edged lower on Tuesday, extending sharp losses from the previous session as investors awaited clearer evidence that crude shipments through the Strait of Hormuz were returning to normal following recent US-Iran peace talks.
Brent crude futures fell 20 cents, or 0.3%, to $77.70 per barrel, while US West Texas Intermediate (WTI) crude declined 12 cents, or 0.2%, to $73.74 per barrel by 0323 GMT.
The decline followed a more than 3% drop on Monday after the United States granted Iran a 60-day sanctions waiver following initial peace negotiations. The market was further pressured by reports of reduced hostilities in Lebanon under the broader regional agreement.
The latest developments came after a tense weekend that raised concerns about the durability of the week-old accord. US President Donald Trump warned that Washington could resume military action if Iran interfered with shipping through the Strait of Hormuz after Tehran announced the strategic waterway’s closure.
Trump said on Monday that Iran had agreed to weapons inspections aimed at ensuring what he described as “nuclear honesty.” He later told reporters that the United States would act if Tehran failed to comply with the agreement.
Analysts said investors remain cautious despite signs of progress. Market participants are seeking confirmation that the agreement will hold and that maritime traffic through the Strait of Hormuz will fully normalize before pricing in a sustained decline in oil prices.
Ship-tracking data showed two crude tankers carrying nearly two million barrels of oil transited the Strait of Hormuz on Monday, indicating a gradual recovery in shipping activity after weaker flows on Sunday amid security concerns.
Separately, data released by the US Department of Energy showed that crude inventories in the Strategic Petroleum Reserve fell to 331.2 million barrels last week, the lowest level since June 1983, reflecting tighter supplies following the US-Iran conflict.