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Oil Edges Higher Even as Ships Continue to Move Through Strait of Hormuz

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Oil edged higher early on Tuesday, extending gains for a second straight session even as shipping through the Strait of Hormuz continues to free up previously trapped barrels.

West Texas Intermediate crude for August delivery was last up 0.6% at $71.17 a barrel, while August Brent crude rose 0.3% to $73.31 a barrel.

The gains came as the United States and Iran held talks in Qatar aimed at reaching a peace agreement to end the four-month conflict that has disrupted shipping through the Strait of Hormuz, the chokepoint for about one-fifth of the world's seaborne oil trade.

Tankers stranded in the Persian Gulf have resumed transiting the Strait after a pause following renewed US and Iranian strikes over the weekend. The New York Times reported that 40 ships exited the Gulf on Monday, citing data from tracking firm Kpler, up from 24 on Sunday.

The resumption of shipping through the Strait has pushed down prices by 23% over the past month and by 30% since the end of the first quarter, the largest drop since 2020.

"Oil prices traded within a relatively tight range near recent lows while remaining on track for their biggest quarterly decline since the pandemic. 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 wrote.

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