Oil prices eased slightly on Tuesday after U.S. guidance for vessels transiting the Strait of Hormuz kept attention on tensions between Washington and Tehran.
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Oil prices edged up on Tuesday as traders gauged the potential for supply disruptions after U.S. guidance for vessels transiting the Strait of Hormuz kept attention squarely on tensions between Washington and Tehran.
Brent crude oil futures were up 37 cents, or 0.54%, at $69.41 a barrel by 9:16 a.m. ET. West Texas Intermediate crude rose 22 cents, or 0.34%, to $64.58.
“The market is still focused on the tensions between Iran and the U.S.,” said Tamas Varga, oil analyst at brokerage PVM.
“But unless there are concrete signs of supply disruptions, prices will likely start going lower.”
Prices rose more than 1% on Monday, when the U.S. Department of Transportation’s Maritime Administration advised U.S.-flagged commercial vessels to stay as far from Iran’s territorial waters as possible and to decline verbally if Iranian forces seek permission to board.
About a fifth of the oil consumed globally passes through the Strait of Hormuz between Oman and Iran, making any escalation in the area a major risk to global oil supplies.
Iran and fellow OPEC members Saudi Arabia, the United Arab Emirates, Kuwait and Iraq export most of their crude via the strait, mainly to Asia.
The guidance was issued despite Iran’s top diplomat saying last week that Oman-mediated nuclear talks with the U.S. were off to a “good start” and set to continue.
Goldman Sachs analysts wrote in a note on Tuesday that prices were supported by geopolitics, with a pick-up in oil on vessels as buyers seek to secure more oil against a backdrop of heightened uncertainty.
“While talks in Oman produced a cautiously positive tone, a modest risk premium has been kept intact by lingering uncertainty over potential escalation, sanctions tightening or supply disruptions in the Strait of Hormuz,” said IG analyst Tony Sycamore.
Meanwhile, the European Union has proposed to extend its sanctions against Russia to include ports in Georgia and Indonesia that handle Russian oil, the first time the bloc would target ports in third countries, according to a proposal document seen by Reuters.
The move is part of efforts to squeeze Russian revenue over the war in Ukraine.