Oil prices fell about 1% on Tuesday as traders weighed a pause in US strikes on Iran that has raised hopes of a diplomatic settlement and a normalisation of Middle East energy flows.
Brent crude futures were down $0.54, or 0.6%, at $87.82 a barrel by 0046 GMT, while US West Texas Intermediate crude was at $81.95, down $0.66 or 0.8%, Ada Derana reported. Both contracts had fallen 1% earlier in the session to their lowest levels in more than a week.
The retreat follows remarks by US President Donald Trump, who said on Monday that Washington was having “good talks” with Tehran and that there was a chance of a deal. He warned, however, that US strikes would resume if negotiations failed to deliver, and Iranian officials issued comparable warnings about renewed retaliation.
“For now, the relief that an off-ramp has been found has taken the heat out of prices and eased concerns around Houthi attacks on Saudi infrastructure. However, the situation remains highly fluid,” IG analyst Tony Sycamore said in a client note.
Risks to shipping remain. Afrah al-Zouba, foreign minister-designate of Yemen’s internationally recognised, Saudi-backed government, said Houthi fighters aimed to replicate Iran’s control of shipping through the Strait of Hormuz at the Bab el-Mandeb strait — a chokepoint linking the Red Sea to the Gulf of Aden.
The direction of crude prices carries immediate weight for Sri Lanka, which imports effectively all of its refined fuel and crude requirements. The Ceylon Petroleum Corporation flagged conditions in the oil market as alarming this week and sought a meeting with President Anura Kumara Dissanayake to discuss supply and pricing exposure.
