Oil prices extended losses on Tuesday after tumbling nearly 3% in the previous session, as investors weighed the implications of progress in U.S.-Iran peace negotiations and a temporary easing of sanctions on Iranian crude exports.
As of 02:35 ET (06:35 GMT), Brent Oil Futures expiring in August fell 1.5% to $76.76 per barrel, while West Texas Intermediate WTI crude futures slipped 1.3% to $72.88 per barrel.
The declines followed a sharp selloff triggered by signs that supply risks from the Middle East could ease further.
Market sentiment improved after Washington issued a 60-day general license allowing the sale, delivery, and import of Iranian crude oil and petroleum products as part of ongoing negotiations with Tehran.
The move came after U.S. and Iranian officials reported progress toward a broader peace agreement and an extension of an interim ceasefire framework.
The sanctions waiver, which also covers related banking, insurance and shipping services, has raised expectations that Iranian exports could increase in coming weeks, potentially boosting global supplies at a time when concerns over disruptions through the Strait of Hormuz are easing.
“Iran had already started ramping up exports following the lifting of the US blockade. This sanctions waiver will open more markets for Iran to sell its oil, including the US,” ING analysts said in a note.
Iranian officials on Monday described the latest talks as having achieved “major progress,” while media reports said Tehran had secured relief on oil and petrochemical exports as discussions continue toward a final accord expected within 60 days.
The prospect of additional Iranian barrels returning to the market overshadowed lingering geopolitical risks.
Oil prices had surged above $120 per barrel at the height of the conflict as shipping through the Strait of Hormuz was disrupted. However, improving transit conditions and diplomatic momentum have led traders to scale back risk premiums embedded in prices.
“Looking ahead, the key uncertainty remains how quickly oil flows through the Strait of Hormuz can normalise,” ING analysts added.
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