Oil Prices Ease Amid Uncertainty Over Iran-US Peace Talks Progress

Oil Prices Eased Amid Uncertainty Over Iran-US Peace Talks

New Delhi: Oil prices declined on Tuesday, following a significant 8% surge in the previous session, as traders reassessed the risk of prolonged supply disruptions due to ongoing uncertainty over Iran-US peace talks.

The August contract of Brent on the Intercontinental Exchange was trading at $94.33 per barrel early Tuesday, representing a 0.68% decrease from its previous close. The July contract of West Texas Intermediate on the Nymex fell 0.67% to $91.54 a barrel.

The uncertainty stems from Iran's semi-official Tasnim News Agency reporting that Tehran had paused talks, citing continued Israeli military action in Lebanon. This move was met with a response from US President Donald Trump, who urged Israeli Prime Minister Benjamin Netanyahu to withdraw troops from Lebanon's capital, Beirut, and spoke with Hezbollah representatives, who agreed to halt attacks on Israeli forces.

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However, Netanyahu's office later stated that Israeli strikes on Beirut would continue if Hezbollah kept targeting Israeli cities and citizens, while military operations in southern Lebanon would proceed as planned. Iran's chief negotiator and parliament speaker Mohammad Bagher Ghalibaf also warned that if the Israeli aggression against Lebanon continues, Iran would not only halt the path of negotiations but also engage in direct confrontation with the enemy.

Despite reports of Iran suspending peace talks, Trump later stated on his Truth Social platform that indirect talks with Iran were continuing at a "rapid pace." The renewed tensions have revived fears that disruptions to global oil supplies could persist for a long time, causing crude prices to surge on Monday.

The Indian crude oil basket was at $96.6 per barrel as of 29 May, comprising a derived basket of sweet grade (Brent dated) and sour grade (Oman & Dubai average) of crude oil imported by Indian refineries. To put this into perspective, here is a comparison of the Indian crude oil basket with Brent crude prices:

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The government stated that domestic refiners continue to operate at high utilisation rates with adequate crude inventories and sufficient stocks of petrol and diesel. Refiners have also increased LPG production to support domestic demand. A petroleum ministry statement on Monday reported that all retail outlets are operating normally across the country, with unusually high sales and heavy crowding observed in certain areas. However, it was assured that there are adequate stocks of petrol and diesel available at all petrol pumps in the country.