Oil prices fell on Tuesday, erasing most of the previous session's gains, after Iran and Israel said they had halted attacks on each other following an appeal from U.S. President Donald Trump, though both sides warned they could resume hostilities.
Brent crude futures LCOc1 were down $1.33, or 1.4%, at $92.92 a barrel at 0741 GMT, while U.S. West Texas Intermediate CLc1 declined $1.73, or 1.9%, to $89.57 a barrel.
The market has been here before, said PVM Oil Associates analyst Tamas Varga, referring to hopes for an end to hostilities that could then end the three-month war in the Middle East.
Still, in the absence of any other movers in the market, prices fell after Iran and Israel said they had now halted attacks on each other. Renewed Israeli strikes on Iran and attacks in Lebanon over the weekend had pushed oil prices up 5% on Monday.
"In the meantime, global oil inventories keep depleting and as data, whether weekly or monthly, becomes available, realization of dangerously low oil stockpiles worldwide could intensify the race for available barrels pushing Brent back above $100 once again," Varga said.
Tehran has continued to block most shipping through the Strait of Hormuz, which before the war carried a fifth of the world's crude oil and liquefied natural gas. Washington has imposed its own blockade of Iranian ports.
Also helping to keep a lid on prices was a drop in China's imports of crude, which were down 29% to their lowest levels in eight years last month. In April, imports fell to a multi-year low of 9.3 million bpd, with refiners in the world's largest oil importer drawing on reserves to offset an even steeper decline from an average of 11 million bpd prior to the U.S.-Israeli war on Iran.
On Monday, U.S. forces disabled an unladen oil tanker in the Gulf of Oman after it attempted to sail to an Iranian port in violation of the ongoing blockade against Iran, the U.S. military said.
(Reuters - Reporting by Pooja Menon in Bengaluru, Emily Chow in Singapore; Editing by Sonali Paul and Susan Fenton)
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