Oil prices decline as tensions ease between U.S. and Iran

ING strategists Ewa Manthey and Warren Patterson noted Tuesday that prices have decreased as expectations of de-escalation grow. They highlighted the recovery of regional oil flows and reports indicating a potential shift in Iran’s stance on controlling the Strait of Hormuz as contributing factors.

“For now, the return of more Gulf barrels and the prospect of easing tensions are taking some of the geopolitical premium out of crude. However, with regional negotiations still uncertain and infrastructure risks persisting, we expect oil prices to remain sensitive to developments in the Middle East,” the strategists stated.

Energy consultancy chairman Fereidun Fesharaki expressed skepticism regarding the possibility of a peace deal during an appearance on CNBC’s “Squawk Box Asia.” He emphasized the significant divide between the U.S. and Iran, particularly concerning Iran’s nuclear material and control of the Strait of Hormuz.

“The difference between the two sides is so wide, it cannot be bridged,” Fesharaki said. “The U.S. wants all the nuclear material, enriched material, to be transferred out of Iran, and there is no way that the Iranian regime would agree to this, and there is no way the Iranian regime would agree to let the Strait of Hormuz be open for a free flow of oil the way it was before the war.”

Fesharaki further suggested that U.S. President Trump faces a choice between declaring victory and disengaging or initiating military action, with a limited timeframe for such action alongside Israeli Prime Minister Netanyahu.

Recent Israeli elections saw Netanyahu’s party failing to secure a majority, with Gadi Eisenkot, former chief of the Israel Defense Forces, now tasked with forming a government.