Shafaq News
Oil prices extended declines onTuesday, down by over $1 per barrel amid hopes for a resolution in theU.S.-Iran war which significantly disrupted global energy flows.
Brent crude futures were down $1.47,or 1.66%, at $86.89 by 0326 GMT, their lowest since July 20. U.S. West TexasIntermediate crude was at $81.16 a barrel, down $1.45, or 1.76%, also thelowest level since July 20.
Both contracts slid around 8% inthe prior session after the U.S. abruptly suspended a campaign of air strikesagainst Iran over the weekend.
U.S. President Donald Trump said onMonday the United States was having "good talks" with Iran and thatthere was a chance of a resolution. However, he said U.S. strikes would resumeif negotiations failed while Iran issued similar comments about retaliation.
"For now, the relief that anoff-ramp has been found has taken the heat out of prices and eased concernsaround Houthi attacks on Saudi infrastructure. However, the situation remainshighly fluid," IG analyst Tony Sycamore said in a client note.
Afrah al-Zouba, the foreignminister-designate of Yemen's internationally recognised Saudi-backedgovernment, said Yemen-based Houthi fighters aimed to replicate Iran's controlof shipping through the Strait of Hormuz at Bab el-Mandeb.
"Whether the Houthis have themilitary capacity to enforce a comprehensive blockade is questionable,especially given that the Saudis will attack them relentlessly. Still, thereis no doubt that traffic has dropped off significantly in the Red Sea and theStrait of Hormuz," Marex analyst Edward Meir said.
"A key reason prices are noteven higher than they are right now is the demand destruction that is takingplace, especially in Asia," Meir said.
Also weighing down oil prices wasnews that the Caspian Pipeline Consortium's Black Sea terminal on the Russiancoast has resumed oil loadings, after a one-week stoppage following Ukrainiandrone attacks.
Still, analysts warned that therisks to supply disruptions spreading to the Red Sea remain elevated afterSaudi Arabia said it shot down drones aimed at petroleum targets, including inRiyadh. It said they had been launched from Iraq by Iran-backed armed groups,and it reserved the right to respond.
Separately, Iran's Houthi allies inYemen said they had targeted the East-West Pipeline carrying oil to SaudiArabia's main Red Sea port of Yanbu in retaliation for Saudi drone incursions.
Barclays analysts said in a note onMonday "flows through the strait remain subdued". They said, in theweek ended July 24, crude oil and refined product net exports through thestrait averaged 2.9 million barrels a day compared with 5.9 million in theprevious week.
Elsewhere, U.S. crude oil stockpileslikely fell last week alongside gasoline, while distillate stocks likely rose,a preliminary Reuters poll showed on Monday.
(REUTERS)
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