Oil prices dip as mediation efforts offset US-Iran strikes
By Ishaan Arora
July 21 (Reuters) – Oil prices softened on Tuesday; Markets weighed on reports of new attacks between the United States and Iran and efforts to mediate against the threat of Yemen’s Houthis to impose a naval blockade of Saudi Arabia.
Brent crude futures were down 35 cents, or 0.4%, at $88.87 a barrel by 0052 GMT, while U.S. West Texas Intermediate crude for September delivery was steady at $82.47 a barrel. Both contracts were trading below more than a month highs in the previous session.
Yemen’s pro-Iran Houthis said on Monday they would impose a naval blockade on Saudi Arabia, opening a potential new front against the United States in its war against Iran and increasing the threat to global energy supplies and trade beyond the Gulf.
“The Houthis’ threats to impose a naval blockade of Saudi Arabia are significant because they increase the risk of disruption to another major oil exporter,” said Tim Waterer, chief market analyst at KCM Trade.
Separately, a senior Iranian official told Reuters that Tehran had received an offer from mediators for a 10-day ceasefire as part of efforts to salvage an interim agreement signed on June 17 aimed at paving the way for a permanent agreement to end the war that began with US-Israeli attacks on Iran on February 28.
The diplomatic move came after another night of US attacks on Iranian cities and attacks by the Iranian Revolutionary Guard against US military assets in the region. Later Monday, U.S. Central Command said a new round of attacks had been launched against Iran.
“(Oil) has already come a long way and certainly has the potential to rise again. However, in the short term, overnight de-escalation and talk of peace talks appear to be limiting the rally for now. It remains to be seen whether anything will come of these peace talks,” IG market analyst Tony Sycamore wrote in a note. he said.
U.S. crude oil stockpiles were expected to fall along with gasoline last week, while distillate stockpiles were expected to rise, according to a preliminary Reuters poll on Monday.[EIA/S]
(Reporting by Ishaan Arora in Bengaluru; Editing by Jacqueline Wong)
