Brent crude slides to $77.90, Russian Urals down to $61.19
Traders unwind risk premium as Brent falls while WTI edges higher
Oil prices were mixed in early Asian trading on Tuesday as investors weighed easing geopolitical tensions in the Middle East against the prospect of additional Iranian crude returning to global markets following a temporary easing of US sanctions.
As of 7:59 am Tokyo time, US West Texas Intermediate (WTI) crude was trading at $74.29 a barrel, up 43 cents, or 0.58%, while Brent crude, the international benchmark, stood at $77.90 a barrel, down $2.67, or 3.31%, according to market data.
The divergence came after crude prices swung sharply in recent sessions as traders reassessed the risk of supply disruptions in the Strait of Hormuz, the world's most important oil shipping chokepoint.
Markets have increasingly focused on signs that tensions could ease following the launch of US-Iran peace negotiations and Washington's decision to grant Iran a 60-day waiver from key oil sanctions.
Iran crude exports
The move is expected to allow Iranian crude exports to resume more openly, adding barrels to the global market and easing fears of a prolonged supply squeeze.
Other crude benchmarks also traded lower.
Murban crude fell 3.86% to $70.79 a barrel, while WTI Midland dropped 3.88% to $74.72.
Russia's Urals blend declined 5.19% to $61.19, and Dubai crude was little changed at $81.29.
Refined fuel markets were steadier.
US gasoline futures rose 0.67% to $3.007 per gallon, while heating oil gained 0.55% to $3.110 per gallon. Natural gas futures slipped 0.55% to $3.235.
The pullback in Brent suggests traders are unwinding part of the geopolitical risk premium that had been built into prices during the height of the regional conflict.
Even so, oil markets remain sensitive to developments in the Middle East, particularly any changes affecting shipping through the Strait of Hormuz or the pace at which Iranian oil returns to international buyers.
Historically, when Iran–Israel tensions ease, oil prices fall sharply toward pre-conflict levels.
For example, after a prior Iran–Israel ceasefire, Brent dropped 6% to ~$67/barrel and WTI fell 6% to ~$64.37, returning to levels seen before the conflict.
Analysts projected Brent could stabilise "near $70/bbl" if the ceasefire held.
