Oil Prices Stabilize Amid Optimism Toward Iranian Nuclear Deal Negotiations

US-Iran Ceasefire Talks Show Progress, Oil Prices Hold Steady

Oil prices held a drop on Tuesday as negotiations between the US and Iran to extend a ceasefire and reopen the Strait of Hormuz showed signs of progress. West Texas Intermediate traded near $91 a barrel, after a sharp decline in the week's opening session due to a US holiday. The contract did not settle on Monday, but talks between the two nations appeared to be proceeding smoothly.

President Donald Trump posted on Monday that negotiations were "proceeding nicely," while also warning that fresh attacks could be launched if the talks were unsuccessful. Pakistan's military chief, the main interlocutor, informed China that an agreement was close. However, signs of hostilities remained, with loud explosions reported around the strait near the Iranian coastal cities of Sirik and Jask. American and Israeli warplanes had targeted several Iranian vessels south of Larak Island, according to state-run Nour News.

Despite a fragile ceasefire and efforts to reopen the critical waterway, crude prices, which rallied in March and April, are on pace for a monthly loss in May. The Strait of Hormuz, through which a fifth of the world's oil and liquefied natural gas flowed during peacetime, remains closed due to a double blockade by the US and Iran.

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In a separate post, President Trump suggested that Tehran's enriched uranium would preferably be destroyed in Iran, although the material could also be turned over to the US. The US has cited the Islamic Republic's nuclear program as a major reason for the conflict with Israel, maintaining that Tehran poses a threat as it seeks to develop nuclear weapons.

The US and Iran have been negotiating a deal that would see them extend the ceasefire for about two months, with the US lifting its blockade and Tehran reopening Hormuz in that time frame. However, sticking points remain, with Tehran demanding the ability to manage maritime traffic through the chokepoint, a position opposed by the US, Arab states, and Europe.

The ongoing challenges were highlighted by Israel's announcement on Monday that it would intensify strikes against Iranian-backed Hezbollah in Lebanon. Tehran has demanded the cessation of hostilities in that country as part of any agreement with the US.

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