Brent crude lowest since July 20 as US, Iran pause attacks

Brent crude futures were at their lowest since July 20 on Tuesday, as oil prices extended losses by more than $1 a barrel on hopes of a resolution in the US-Iran war, which had significantly disrupted global energy flows. Brent crude futures were down $1.47, or 1.66%, at $86.89 by 0326 GMT, while US West Texas Intermediate crude was at $81.16 a barrel, down $1.45, or 1.76%, also the lowest level since July 20.

Both contracts had slid about 8% in the previous session after the US abruptly suspended a campaign of air strikes against Iran over the weekend. US President Donald Trump said on Monday that the United States was having "good talks" with Iran and that there was a chance of a resolution. He also said strikes would resume if negotiations failed, while Iran issued similar comments about retaliation.

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According to Axios, Trump said he decided to pause strikes to give negotiations another chance. In remarks to reporters aboard Air Force One, he also said there was a "good chance" the talks would make progress, although it remained unclear whether any substantial discussions were taking place.

Crude has been whipsawed this month, first surging as hostilities between Washington and Tehran escalated again and the war spread to the Red Sea, and then falling as tensions eased in recent days. Still, traders remained cautious as tanker traffic through the Strait of Hormuz had yet to return to normal.

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"I don’t think the Middle East is ‘solved’," said Scott Shelton, energy specialist at TP ICAP Group Plc. There needs to be "real evidence of oil moving through the Strait of Hormuz, which I think has yet to happen", he added.

Afrah al-Zouba, the foreign minister-designate of Yemen's internationally recognised Saudi-backed government, said Yemen-based Houthi fighters aimed to replicate Iran's control of shipping through the Strait of Hormuz at Bab el-Mandeb.