Oil prices fell Tuesday after investors turned their attention to a potential oil talks meeting in the Qatari capital of Doha. Traders are hoping the talks between the United States and Iran could help to reduce the simmering tensions in the key Strait of Hormuz. 

Diplomacy started to win over geopolitics with both benchmarks, Brent and WTI, coming under heavy pressure as fighting resumed a sharp monthly decline.

Benchmarks Hit Monthly Lows

Brent crude oil dipped to approximately $73.51 a barrel Tuesday. Meanwhile, WTI, or West Texas Intermediate, lost ground to approximately $70.28 a barrel.

These new numbers reflect a huge transformation in the energy sector. Brent has plunged almost $20 from its last month price. WTI prices have also declined sharply by about $17 since late May. 

This quick drop has eliminated the “war premium” that would have likely made energy prices even higher during the height of the U.S. and Iran war.

https://www.topforx.com/eu-aluminum-sanctions-russian-import-loophole-sm/

Shipping Risks Fade as Traffic Recovers

The big query for the market is whether this tranquility of the Gulf will persist. Iran has given Qatar a hint that it may be ready to meet with Oman over shipping security in the Strait of Hormuz. They also said they were keenly aware that no specific meetings with the United States were scheduled.

However, the market is improving, with real shipping conditions in the area improving. Ocean traffic through the Strait of Hormuz just reached its highest level since the conflict started. Despite the recent attacks with drones and missiles on commercial vessels.

The huge proportion of daily petroleum and liquefied natural gas shipping transits carrier stability in the Strait of Hormuz helps to keep global energy costs down. The strait is a very important channel for Asian countries’ daily use.

Weak Chinese Demand Caps Market Recovery

Diplomatic efforts in the Middle East provide some relief of potential supply hitches, but drab Asian economic data has a firm hold on any price bounce. China, the top global crude importer, is currently buying less oil than expected. 

Without a strong economic turnaround and higher demand from Chinese refineries, oil prices will likely struggle to gain momentum, even if geopolitical tensions flare up again.

https://www.topforx.com/u-s-japan-and-south-korea-strengthen-cyber/