Oil prices ease as mediators propose US-Iran ceasefire

Oil prices fell on Tuesday, with markets weighing reports of mediation efforts between the U.S. and Iran against an exchange of fresh attacks between the two and threats of a naval blockade of Saudi Arabia by Yemen’s Houthis. Brent crude futures LCOc1 fell 96 cents, or 1.1%, to $88.26 per barrel by 0630 GMT. U.S. West Texas Intermediate crude CLc1 was down 73 cents, or 0.9%, to $82.50 per barrel, while the more active contract for September delivery CLc2 slipped 57 cents, or 0.7%, to $81.91 a barrel. “There’s some hope of de-escalation between the U.S. and Iran. Reports are that mediators are proposing a 10-day ceasefire, which could put the Memorandum of Understanding (MoU) back on track,” ING analysts said in a note, referring to the June interim deal. However, this won’t be easy as major differences remain between Washington and Tehran, while Trump has warned of retaliation after several U.S. soldiers were killed, ING added. A senior Iranian official told Reuters Tehran had received a proposal from mediators for a 10-day ceasefire in efforts to salvage the deal signed on June 17, intended to pave the way for a lasting agreement to end the war that began on February 28 with U.S.-Israeli attacks on Iran. The diplomatic push followed another night of U.S. strikes on Iranian cities and attacks by Iran’s Revolutionary Guards on U.S. military assets across the region. Later on Monday, U.S. Central Command said it had begun another round of strikes on Iran. A tanker in the Strait of Hormuz reported being struck by an unknown projectile, forcing its crew to abandon ship and board a lifeboat, the United Kingdom Maritime Trade Operations agency said on Tuesday. Vessel crossings via the strait also dropped further amid growing caution following fresh attacks between the U.S. and Iran. Additionally, Yemen’s Iran-aligned Houthis said on Monday they would impose a naval blockade on Saudi Arabia, opening a potential new front against the U.S. in its war on Iran and raising the threat to global energy supplies and trade beyond the Gulf. “The threats of a naval blockade on Saudi Arabia by the Houthis are significant because they raise the risk of disruption to another major oil exporter,” said Tim Waterer, chief market analyst at KCM Trade. Meanwhile, U.S. crude oil stockpiles were expected to have fallen last week alongside gasoline, while distillate stocks likely rose, a preliminary Reuters poll showed on Monday.EIA/S