Oil drifts lower as traders weigh supply risks amid US–Iran tensions
Brent crude oil futures were down 18 cents, or 0.26%, at $68.85 a barrel by 0353 GMT. US West Texas Intermediate crude fell 21 cents, or 0.33%, to $64.15
Oil prices eased slightly on Tuesday as traders gauged the potential for supply disruptions after US guidance for vessels transiting the Strait of Hormuz kept attention squarely on tensions between Washington and Tehran.
Brent crude oil futures were down 18 cents, or 0.26%, at $68.85 a barrel by 0353 GMT. US West Texas Intermediate crude fell 21 cents, or 0.33%, to $64.15.
That's after prices rose more than 1% on Monday, when the US Department of Transportation's Maritime Administration advised US-flagged commercial vessels to stay as far from Iran's territorial waters as possible and to verbally decline Iranian forces permission to board if asked.
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About a fifth of the oil consumed globally passes through the Strait of Hormuz between Oman and Iran, making any escalation in the area a major risk to global oil supplies.
Iran along with fellow OPEC members Saudi Arabia, the United Arab Emirates, Kuwait, and Iraq export most of their crude via the strait, mainly to Asia.
The guidance was issued despite Iran's top diplomat saying last week that Oman-mediated nuclear talks with the US were off to a "good start" and set to continue.
"While talks in Oman produced a cautiously positive tone, lingering uncertainty over potential escalation, sanctions tightening, or supply disruptions in the Strait of Hormuz has kept a modest risk premium intact," Tony Sycamore, an analyst at IG, wrote in a client note.
Meanwhile, the European Union has proposed extending its sanctions against Russia to include ports in Georgia and Indonesia that handle Russian oil, the first time the bloc would target ports in third countries, according to a proposal document reviewed by Reuters.
The move is part of efforts to tighten sanctions on Russian oil, a key source of revenue for Moscow, over the war in Ukraine.
Indian Oil Corp bought six million barrels of crude from West Africa and the Middle East, traders said, as the Asian country steered clear of Russian oil in New Delhi's push for a trade deal with Washington.
