Oil steady as investors focus on Hormuz flows after peace talks

BENGALURU/LONDON: Oil prices were little changed on Tuesday as investors watched crude ‌flows through the Strait of Hormuz following progress in U.S.-Iran peace talks.

Brent crude futures were down 26 cents, or around 0.3%, to $77.64 a barrel and U.S. West Texas Intermediate was down 17 cents, or 0.2%, to $73.69 a barrel at 1155 GMT.

Prices fell ​more than 3% on Monday after the United States granted Iran a 60-day sanctions waiver following ​initial peace talks, and as officials reported a lull in hostilities in Lebanon under ⁠a broader agreement.

Venezuelan, Russian and now Iranian crude is available to anyone looking to buy, said Ole ​Hvalbye, market analyst at SEB Research, highlighting that countries would be looking to stock up on crude to ​replenish stores.

In the short term, the easing of sanctions wouldn't weigh on prices much, he added, as the U.S.-Iranian memorandum of understanding was still new and fragile.

A limited number of vessels are being allowed to pass through the Strait of Hormuz each ​day under coordination with Iran's Revolutionary Guards Navy, an Iranian military source told Fars news agency on Tuesday.

U.S. ​President Donald Trump said 19 million barrels of oil flowed out of the strait on Monday, and pointed to falling oil ‌prices ⁠in a social media post on Tuesday.

The world has lost millions of barrels of oil and gas supply since the war closed the strait, a chokepoint for about a fifth of the world's oil and LNG supplies, for more than three months.

"Ship owners and operators will require assurances that the threats posed by mines ​have been fully eliminated. Damaged ​ports, debris in the ⁠water, and congestion present additional obstacles to an unconditional ramp-up in traffic," said Tamas Varga, an analyst at PVM Oil Associates.

Iraq further increased output from its ​southern oilfields to around 2.1 million barrels per day as more tankers line ​up to load ⁠crude from its Gulf export terminals, two Iraqi oil officials told Reuters.

Rabobank cut its oil price forecasts, citing eased disruption risks in the Gulf, and now sees Brent at $79 a barrel in the third quarter and $78 in ⁠the fourth ​quarter.

Geopolitical risk persisted as Lebanon's Hezbollah said Israeli forces opened fire ​on civilians in southern Lebanon on Tuesday and that the incident violated the ceasefire agreement between the two sides.