Oil Falls After Reports of Mediation Efforts Between US and Iran - Sarmad

Oil prices fell on Tuesday as markets balanced reports of mediation efforts between the United States and Iran on one hand, with both sides exchanging new attacks and the Houthis in Yemen threatening to impose a naval blockade on Saudi Arabia on the other.

Brent crude futures fell 35 cents, or 0.4 percent, to $88.87 a barrel by 0052 GMT, while U.S. West Texas Intermediate crude for September delivery held steady at $82.47 a barrel.

The Iran-backed Houthis said on Monday they would impose a naval blockade on Saudi Arabia, potentially opening a new front against the United States in its war on Iran and increasing the threat to global energy supplies and trade outside the Gulf region.

Tim Waterer, chief market analyst at KCM Trade, said, “The Houthis’ threats to impose a naval blockade on Saudi Arabia are significant because they raise the risk of disruption to supplies from another major oil-exporting country.”

On the other hand, a senior Iranian official told Reuters that Tehran had received a ceasefire proposal from mediators for a 10-day halt in fighting, in an attempt to salvage a temporary agreement reached on June 17, aimed at paving the way for a permanent deal to end the war that began on February 28 with U.S.-Israeli attacks on Iran.

These diplomatic efforts came after U.S. strikes on Iranian cities for another night and attacks by the Iranian Revolutionary Guard on U.S. military assets across the region.

U.S. Central Command announced late Monday that it had begun another round of strikes on Iran.

A preliminary Reuters poll conducted on Monday showed that U.S. crude oil and gasoline inventories are expected to have fallen last week, while distillate product stocks are likely to have risen.