Oil prices inched lower on Wednesday, extending the previous session’s declines as investors assessed the U.S.-Iran peace deal, though uncertainty over the full resumption of shipping through the Strait of Hormuz limited further falls.
Brent crude futures dipped 16 cents, or 0.2%, to $78.80 a barrel by 0340 GMT, while U.S. West Texas Intermediate fell 25 cents, or 0.3%, to $75.80 a barrel.
Both benchmarks fell about 5% for a second straight session on Tuesday to stand at three-month lows, on hopes that a U.S.-Iran deal would allow oil flows through the Strait.
The deal would provide for the United States to lift its blockade of Iran’s ports, while Tehran would allow oil tanker traffic through the Strait, effectively blocked since U.S. and Israeli strikes on February 28.
Analysts have said WTI is likely to stay volatile in a range of $10 above or below $80 a barrel.
Details of the interim peace deal began to emerge on Tuesday, with President Donald Trump saying it would rule out a nuclear weapon for Tehran and a U.S. official saying it would allow Iran to sell oil upon signing.
The memorandum of understanding, not yet public, extends by another 60 days a tenuous ceasefire agreed in April, so as to allow room for talks toward a permanent truce.
Still, industry officials say a full return to pre-war production and refining levels is likely to take weeks, months, or even years.
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Israel has distanced itself from both the April ceasefire and the latest U.S.-Iran pact, fuelling uncertainty about whether it will hold.
Israeli drone strikes targeted three vehicles in southern Lebanon on Tuesday, killing at least four and wounding others, Lebanon’s National News Agency said, prompting a rare public rebuke from Trump.
The prospect of extra supply added to optimism on the resumption of Mideast exports and helped push yields on U.S. Treasuries lower, along with a rally in global bonds, even as the conflict has drained strategic oil reserves.
