Oil prices fall as easing US-Iran tensions calm down supply fears

Oil prices extended their sharp decline on Tuesday as signs of easing tensions between the US and Iran reduced fears of a broader military escalation and potential supply disruptions in the Middle East.

International benchmark Brent crude plunged more than 6.5 percent to around USD86.2 per barrel as of 2020GMT, extending its 2.4 percent decline in the previous session.

US benchmark West Texas Intermediate (WTI) also fell 5.5 percent to USD80.40 per barrel.

Prices came under heavy selling pressure as investors assessed renewed diplomatic efforts aimed at easing tensions between Washington and Tehran.

Pakistan’s army chief visited Tehran in an effort to support diplomatic initiatives, while Qatar said it was continuing mediation efforts between the sides.

Reports that Washington could soon return diplomats evacuated from the region also reinforced expectations that a wider military confrontation may be less imminent.

The decline accelerated after the latest US measures aimed at increasing economic pressure on Iran proved less severe than markets had anticipated.

US Treasury Secretary Scott Bessent said countries trading with Tehran would be given a deadline to wind down their commercial ties or face unilateral penalties.

The phased approach eased concerns that Washington would immediately impose measures capable of severely disrupting Iranian oil exports.

Meanwhile, substantial volumes of crude continue to pass through the Strait of Hormuz, a critical route for global energy shipments, although some cargoes are reportedly moving discreetly.

The continued flow of oil through the waterway has helped ease immediate concerns over a major supply shortage, adding further downward pressure on prices.

-Philippine News Agency