Brent crude futures declined more than 1% on Tuesday and were headed for their lowest in a month since 2020, pressured by optimism around renewed US-Iran peace talks, while supply glut concerns are starting to emerge.
The Brent futures dipped 1% to $72.45 per barrel. Murban futures closed at $69.16/bbl on June 29 and were not trading by the time of publication of this oil price update.
"Oil prices traded within a relatively tight range near recent lows while remaining on track for their biggest quarterly decline since the pandemic," Saxo Bank analysts noted.
The Brent futures lost more than 21% on a month-over-month basis so far in June and on a quarterly basis the contract has lost nearly 38%.
The underlying catalyst for the steep correction is a notable acceleration of commercial shipping flows through the Strait of Hormuz following the easing of a military blockade.
"Flows through the Strait of Hormuz continue to accelerate, prompting warnings from Morgan Stanley that the release of previously stranded barrels could create a near-term supply glut and put additional downward pressure on prices," Saxo Bank analysts noted.
On the diplomatic front, US Secretary of State Marco Rubio issued a stern warning, stating that Washington considers any maritime tolls or transit fees imposed on ships passing through the waterway to be completely unacceptable.
In response, a senior Iranian official reportedly reaffirmed Tehran's baseline resolve to retain regulatory control over the Strait, keeping risk premiums sticky despite the broad downward price trend.
Meanwhile, conflicting narratives have emerged regarding upcoming diplomatic engagement in Doha, Qatar.
US President Donald Trump stated in a social media post that both sides were poised to hold fresh talks on Tuesday following a volatile weekend of hostilities, describing the Doha gathering to reporters at the White House as potentially important.
However, Iran's Deputy Foreign Minister for Legal and International Affairs, Kazem Gharibabadi, explicitly refuted these claims, stating that no technical working group meetings or direct talks with US officials are scheduled for this week, highlighting a persistent diplomatic disconnect between Washington and Tehran.