Oil Trading Lower on Calming Middle East Tensions
Oil prices fell early on Tuesday on calming tensions in the Middle East as Iran and Israel ended their missile attacks and U.S. President Trump said negotiations to end the war on Iran and reopen the Strait of Hormuz are in their "final throes".West Texas Intermediate crude oil for July delivery were last seen down US$1.73 to US$89.57 per barrel, while August Brent oil was down US$1.46 to US$92.70.Iran on the weekend launched missile strikes on Israel to force an end to Israel's occupation of southern Lebanon and Israel responded with strikes on Iran. The pair on Monday agreed to end hostilities, though Israel continues its war on the Iran-backed Hezbollah militant group, on Tuesday warning ordering residents of the city of Tyre to evacuate ahead of planned attacks on the city.The tenuous ceasefire between U.S. forces and Iran remains in place, with little word on the state of negotiations between the two, with Iran saying it will refuse talks until Israel withdraws from Lebanon. However the New York Times reported Trump told Israel Prime Minister Benjamin Netanyahu the U.S. is near a long-term deal to check Iran's nuclear program."Oil gave back most of Monday's gains after Israel and Iran halted hostilities that had threatened to derail already fragile efforts to secure a broader peace agreement in the Middle East. US President Donald Trump, meanwhile, maintained his typically optimistic tone, saying negotiations are in the "final throes" of what he expects will be a successful deal," Saxo Bank wrote.The war is now in its fourth month, keeping the Strait of Hormuz blocked, shutting in much of the 20% of daily oil demand supplied by Persian Gulf nations. The largest-ever energy supply shock has kept oil prices high, with little expectations they will fall in the near term even if the Strait reopens, with Gulf producers needing to repair infrastructure damaged in the war and restart shut-in oilfields."Hormuz remains closed, and if suddenly opened tomorrow, will take up to a year to revert to normalcy," PVM Oil Associates noted.