- Crude oil prices declined with Brent near $92 a barrel amid Iran-US deal hopes
- Brent futures dropped 0.54% to $92.04 after a 6% fall the previous session
- Tensions persist despite optimism, with US strikes and attacks near Strait of Hormuz
Crude oil prices extended their decline on Tuesday, with Brent hovering around $92 a barrel amid hopes of a possible deal between Iran and the US.
When last checked, Brent crude oil futures were trading 0.54% lower at $92.04 a barrel.
Brent had fallen around 6% in the previous session, hitting its lowest level since late August, as investors weighed the possibility of a diplomatic resolution to the Middle East conflict against continued attacks on shipping in the Strait of Hormuz.
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US President Donald Trump expressed optimism about a possible resolution, citing "momentum toward an end" to the conflict following his meeting with Qatar's prime minister. However, tensions remain elevated, with reports of further US strikes on Iran's Qeshm Island and attacks on tanker vessels near the Strait of Hormuz.
Iran has also maintained its position that it will not negotiate unless Washington takes practical steps to meet its conditions. Meanwhile, US Secretary of State Marco Rubio has tempered expectations of progress in negotiations.
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Elsewhere, Saudi Arabia and Oman have called for continued diplomatic efforts to contain the regional crisis and safeguard maritime security. The Houthis have also claimed responsibility for an attack on Saudi Aramco's corporate office in Riyadh.
Oil Prices: What Triggered Monday's Fall?
Brent crude futures fell $5.34, or 5.4%, to $92.97 a barrel on Monday. US West Texas Intermediate crude futures declined $3.68, or 4.1%, to settle at $87.15.
The decline came after Trump's comments that he was unlikely to order fresh attacks on Iran as long as negotiations to end the conflict continued.
The Brent benchmark had already plunged 16% last week to touch $93.22 a barrel, marking its steepest weekly decline since the onset of the Covid-19 pandemic.
However, attacks on vessels in and around the Strait of Hormuz have kept supply risks in focus. The waterway remains a key route for global oil shipments, and any disruption could affect supplies and prices.
Oil Market Supply: Signs Of A Surplus Emerge
Apart from developments in the Middle East, concerns over global oil supply and demand are also weighing on prices.
Morgan Stanley reportedly said in a report on Monday that Dated Brent, a benchmark used to price physical oil cargoes, had weakened to a discount to the nearby Brent futures contract, pointing to weakness in the physical market.
According to reports, JPMorgan estimated the global oil surplus at around 1.4 million barrels per day in October, citing signs that high prices were curbing demand.
Meanwhile, OPEC crude oil production rose by 1.38 million barrels per day in October from the previous month to 22.87 million barrels per day, according to a Reuters survey. The increase was led by higher output from Saudi Arabia, Kuwait and Iraq.
Investors now await monthly oil market reports from the US Energy Information Administration (EIA), OPEC and the International Energy Agency (IEA) for further cues on global supply and demand.
The latest US inventory data will also remain in focus. A preliminary Reuters poll showed that US crude oil and product stockpiles were expected to have declined last week. Meanwhile, crude stocks in the US Strategic Petroleum Reserve fell to 279.5 million barrels, their lowest level since October 1982.
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