Asian markets moved lower on Tuesday as investors monitored developments surrounding U.S.-Iran negotiations and rising oil prices, which added to concerns about the economic outlook.
South Korea's Kospi fell 1.50%, while Japan's Nikkei 225 declined 0.59%. Australia's ASX 200 was marginally higher, gaining 0.05%.
Market sentiment remained cautious as traders assessed the latest signals from Washington and Tehran following recent diplomatic engagements aimed at easing tensions in the Middle East.
Oil prices edged higher in early trading, reflecting uncertainty over the direction of the negotiations. Brent crude futures for August delivery rose 0.36% to $78.18 a barrel, while U.S. West Texas Intermediate crude for August gained 0.45% to $74.19 a barrel.
The move followed a decline in crude prices overnight after the U.S. Treasury issued a 60-day licence permitting the production, sale and delivery of Iranian oil. The authorisation also allows imports of Iranian crude into the United States and permits transactions to be settled in U.S. dollars. The licence is scheduled to expire on Aug. 21.
Despite the temporary easing of restrictions, questions remain over how Iran could use revenues generated from increased oil exports.
Asked whether oil proceeds could be diverted to military spending, President Donald Trump said Iran was not expected to do so.
"Well, they're not supposed to be doing that, so we'll see," Trump said during an executive order signing event at the White House.
He added that Iran should use the funds to meet domestic needs, including food imports.
Investors also watched the diplomatic track closely after Vice President JD Vance described the opening round of talks with Iran as "very, very good" and said Tehran had agreed to allow nuclear inspectors to return.
Iranian officials acknowledged progress in the discussions but disputed that claim, saying Vance's comments were inaccurate and did not reflect the situation.
With oil prices remaining sensitive to headlines from both sides, investors continued to assess whether recent diplomatic efforts would lead to a lasting agreement or renewed tensions in the region.
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