Oil prices fell early Monday on reports that talks between Iran and the US may resume, even as the two sides continued to exchange attacks.
West Texas Intermediate crude for August delivery was last down $1.52, or 1.8%, at $80.97 a barrel, while September Brent crude fell $1.19, or 1.4%, to $86.91.
The decline followed reports that Iran remains open to a negotiated settlement to the war launched by the US and Israel on Feb. 28, The Guardian reported. Iranian officials said mediators continue to exchange messages aimed at ending the conflict, while US Secretary of State Marco Rubio said he is open to fresh talks.
Fighting still continued over the weekend, with Iran striking ships transiting the Strait of Hormuz and the US attacking targets in Iran. The conflict has left ships trapped inside the Persian Gulf, disrupting traffic through the Strait of Hormuz, the key chokepoint for exports from Persian Gulf producers that supplied about one-fifth of global oil demand before the war.
Shipping through the Strait has almost stalled amid the fighting, with hormuzstraitmonitor.com reporting just four ships have moved through the waterway over the past day, leaving 490 ships, including 175 tankers, trapped and waiting for a peace deal that is likely to favor Iran.
"Little has changed from the underlying fundamentals prevailing earlier in the conflict. Iran's leaders fear a disadvantageous peace more than a disadvantageous war, risking a prolonged conflict even at greater long-term economic cost. A more constructive-leaning take on the recent fighting is that this represents a last-ditch US attempt to find a geopolitical hook to avoid a strategic defeat, before accepting a reopened Strait under some Iranian influence," Erik Meyersson, Chief EM Strategist at SEB Research wrote.