Key facts
- Oil prices declined as U.S.-Iran tensions eased.
- President Trump stated the U.S. was engaged in 'good talks' with Iran.
- Ongoing shipping disruptions in the Red Sea continue to impact energy flows.
- Recent EIA data indicated inventory builds, suggesting potential demand destruction.
Oil prices continued their downward trend as calm between the United States and Iran persisted, with WTI crude falling to $80.98 per barrel and Brent crude slipping to $86.80 per barrel. President Trump expressed optimism about diplomatic progress, stating that the U.S. was engaged in 'good talks' with Iran, a sentiment echoed by Iranian officials. Both nations, however, have indicated readiness to resume hostilities if diplomacy falters. Despite the easing geopolitical risk premium, oil prices remain elevated due to ongoing shipping disruptions, particularly concerning traffic through the Red Sea and the Bab el-Mandeb Strait, following a recent Houthi attack on Saudi oil installations. Demand destruction is also contributing to the price pullback, as consumption has been affected by prices exceeding $100 per barrel. Last week's EIA report of inventory builds across the board is seen as an early indicator of this trend.