Oil was down by about 2 per cent on Tuesday on hopes tensions between the United States and Iran were easing after Iran’s foreign minister said the countries had reached an understanding regarding nuclear talks.
Brent futures fell $1.23 or 1.8 per cent to $67.42 a barrel, and the US West Texas Intermediate (WTI) futures slipped 56 cents or 0.9 per cent to $62.33 per barrel.
According to Iranian Foreign Minister, Mr Abbas Araqchi, his country and the United States reached an understanding on the main “guiding principles” in a second round of indirect talks in Geneva, Switzerland, over their nuclear dispute on Tuesday.
However, this does not mean a deal is imminent.
Iran’s supreme leader said on Tuesday that any US attempt to depose his government would fail as the US continued a military buildup exercise in the Middle East.
Iran will close parts of the critical oil shipping lane in the Middle East, the Strait of Hormuz, for a few hours on Tuesday as it is conducting military drills in the area. The government said the partial closure is due to security precautions.
The Strait of Hormuz, the narrow lane between Iran and Oman, is the world’s most critical oil transit chokepoint, and the oil market has time and again feared Iran could attempt to close the lane. In 2024, oil flow through the strait averaged 20 million barrels per day, or the equivalent of about 20 per cent of global petroleum liquids consumption.
Iran and fellow Organisation of the Petroleum Exporting Countries (OPEC) members Saudi Arabia, United Arab Emirates, Kuwait and Iraq export most of their crude via the Strait, mainly to Asia.
Negotiators from Ukraine and Russia concluded the first of two days of US-mediated peace talks in Geneva on Tuesday, with US President Donald Trump pressing Ukraine to act fast to reach a deal to end the four-year conflict.
Meanwhile, Ukraine continued its attacks on Russian energy infrastructure. Its military said on Tuesday it struck the Ilsky refinery, while a drone attack was also reported at the port of Taman.
A peace resolution could see a lifting of sanctions on Russia, bringing Russian oil back to the mainstream market. In 2025, Russia was the third-biggest crude producer in the world behind the United States and Saudi Arabia.