Oil prices retreat following three-day gains as news of the strengthening of the ceasefire agreement between Israel and Lebanon fuelled optimism for a wider diplomatic breakthrough to end the US-Israel war on Iran.
Brent crude futures slipped 67 cents, or 0.69 percent, to trade at $97.14 per barrel as of 00:15 GMT, while US West Texas Intermediate (WTI) crude futures declined by 62 cents, or 0.65 percent, to $95.40 per barrel.
The last weeks’ oil drop vanished as fresh clashes between US and Tehran gained optimism over a deal to extend the current ceasefire. As negotiations drag on, the world’s supply cushion is running out.
While US President Donald trump hinted resumption of normal operations upon signing the MoU with Iran to cease hostilities, it is skeptical as both nations fail to lock a deal.
The oil market’s main focus remains the key waterway, through which one-fifth of global crude normally passes. The effective paralysis of the chokepoint under a double blockade by Tehran and Washington has sent fuel prices higher, as vessel movements remain limited.
Earlier on Wednesday, US Secretary of State Marco Rubio pressed to wind down the existing sanctions waiver on Russian oil at the earliest. Addressing Congressional hearing, Rubio described the waiver as a temporary arrangement to prevent sudden shock to global energy markets. Designed as short term relief to support the demand-supply, the exemption has been extended twice with the current lapsing on June 17.
“That ultimately is a decision to be made by Treasury. I can tell you it depends on the circumstances at the time. We would like to end it as soon as possible because the underlying policy of this country has been to sanction their oil. These were time-limited waivers for opening up more global supply,” Rubio said.