Oil falls as investors focus on potential Iran-US talks

Oil prices dropped on Tuesday, with investors eyeing the outcome of potential U.S.-Iran talks in Doha amid weekend missile fire from both sides that tested an interim ceasefire to ​end the four-month-old war.

Brent August crude futures , which expire on Tuesday, were down 1.03%, ‌or 75 cents, at $72.40 a barrel as of 0038 GMT. The more actively traded September contract was down 0.54%, or 40 cents, at $73.51 a barrel.

U.S. West Texas Intermediate fell 0.66%, or 47 cents, to $70.32 a barrel.

"Investors ​are pricing in hopes of a positive outcome from the Doha talks, even though ​real normalisation of flows through the Strait of Hormuz is not yet visible," ⁠said Tim Waterer, chief market analyst at KCM Trade.

"The market is cautiously hopeful but still ​hedging its bets until we see more tangible signs of de-escalation," Waterer added.

Iranian and Omani experts ​will start talks on redefining transit paths through the Strait of Hormuz in the coming days, Iranian Deputy Foreign Minister Kazem Gharibabadi told state TV on Monday, adding that his country will try to obstruct vessels outside ​defined paths.

However, Iran's Foreign Ministry spokesperson Esmaeil Baghaei said there won't be any negotiation meetings at ​any level with the American side in the coming days.

"The meeting in Doha is going to be perhaps ‌important, perhaps ⁠not. We're going to find out," U.S. President Donald Trump told reporters in the Oval Office.

The uncertainty over whether the two sides would meet highlighted the fragility of a June 17 agreement to pause fighting that has disrupted global oil flows through the Strait of Hormuz and posed ​a political challenge for ​Trump ahead of ⁠November’s congressional elections.

Israel has not joined the U.S.-Iran peace talks and has distanced itself from the agreement.

Meanwhile, Middle East producers are pushing ahead with loading ​oil and LNG despite fresh ship attacks in the Strait of Hormuz ​and renewed ⁠strikes between the U.S. and Iran in recent days, shipping data showed.

"Assuming Persian Gulf flows continue to recover at the same average pace as over the last two weeks... Gulf flows could return to ⁠pre-war ​levels of 23 million barrels per day already by early ​July," analysts at Goldman Sachs wrote in a note dated June 29.

Traffic last week hit its highest level since the ​conflict began at the end of February.

-Reuters