London: Oil prices fell by more than $1 on August 27 as renewed Middle East talks raised hopes of easing supply disruptions across key Gulf energy routes.
Brent crude futures fell $1.36 or 1.55 percent to $86.48 a barrel at 0800 GMT. The benchmark was heading for a fourth consecutive day of losses. West Texas Intermediate (WTI) crude futures dropped $1.40 or 1.7 percent to $80.83 a barrel. WTI was on course for a fifth straight day of declines.
The fall in oil prices came as Qatar’s prime minister prepared to travel to Iran to restart diplomatic efforts aimed at ending the conflict. The war is approaching its sixth month. Fighting has largely paused but a diplomatic breakthrough has yet to emerge.
A key issue remains control of the Strait of Hormuz. The waterway is a major chokepoint for global energy supplies and Tehran has used control of the route as leverage during the conflict.
Before the war began in late February, the Strait of Hormuz handled about one-fifth of global daily oil and liquefied natural gas supplies. Its role as a transit route for exports from major Gulf producers has kept global energy markets focused on the risks of prolonged disruption.
The prospect of renewed talks strengthened investor expectations that shipping conditions could improve and supply concerns could ease. Data also showed a slight increase in shipping traffic through the strait on August 26 despite the continuing standoff.
The United States has halted attacks on Iran for about a month while seeking to increase economic pressure on Tehran. The pause in military action and the prospect of diplomatic engagement added to market expectations of reduced disruption across Gulf energy routes.
Oil markets remain sensitive to developments surrounding the conflict and the Strait of Hormuz. Any progress in talks could help ease concerns over crude and liquefied natural gas flows. However, the dispute over control of the strategic waterway remains unresolved as the conflict moves closer to its sixth month, leaving oil prices sensitive to further developments.
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