Crude oil was down by $1 per barrel on Monday after reports emerged that Iran was seeking an end to hostilities with Israel, raising the possibility of a truce and easing fears of a disruption to supplies from the region.
During the session, Brent crude futures lost 1.35 per cent or $1 to trade at $73.23 a barrel while the US West Texas Intermediate (WTI) crude futures fell by 1.66 per cent or $1.21 to finish at $71.77 per barrel.
Last week, oil prices surged more than 7 per cent after Israel began bombing Iran over claims that the latter was close to securing an atomic bomb.
Reuters reported that Iran asked Qatar, Saudi Arabia and Oman to press US President Donald Trump to use his influence on Israel for an immediate ceasefire in return for Iran’s flexibility in talks about its nuclear programme.
The Wall Street Journal reported that Iran told the Arab mediators it could also resume nuclear talks if the US doesn’t join Israel’s attack.
Officials told the American newspaper that Iran feels Israel lacks a clear exit strategy and can’t afford to get caught in a war of attrition; a priority is keeping the US out of the fight.
Regardless of the truce talk, both sides continued to step up attacks – Israel issued an evacuation warning for a district in Tehran and bombed an Iranian television station, while Iran fired more missiles at Israel and called on Tel Aviv residents to evacuate.
Market analysts noted that despite the airstrikes, which included on energy infrastructure, key oil export facilities have not yet been hit.
Iran, a member of the Organisation of the Petroleum Exporting Countries (OPEC), currently produces around 3.3 million barrels per day and exports more than 2 million barrels per day of oil and fuel.
OPEC’s Monthly Oil Market Report (MOMR) on Monday showed that crude oil production rose by 180,000 barrels per day to 27 million barrels per day in May, with producers part of the OPEC+ agreement raising output by much less than the 411,000 barrels per day.
The five OPEC members that have pledged cuts in the OPEC+ agreement – Saudi Arabia, Iraq, UAE, Kuwait, and Algeria – and are now gradually unwinding these cuts had to raise their combined output by 310,000 barrels per day in May.