WTI drifts lower below $89.50 as traders await progress on Middle East peace talks

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $89.35 during the early European trading hours on Tuesday. WTI price declines as traders have treated any progress toward ending the Iran conflict with caution, given the fragility of a US–Iran ceasefire struck in early April.

Iran's Tasnim news agency said on Monday that Tehran's negotiating team is stopping exchanges of messages with the US through mediators due to attacks on Lebanon. In response, US President Donald Trump said that Washington will keep its blockade on Iranian ports. “If they don’t want to talk, that’s OK with me,” he said.

Separately, Trump stated that he believes an agreement to reopen the Strait of Hormuz and extend the ceasefire with Iran is reachable “over the next week.” Meanwhile, Israeli Prime Minister Benjamin Netanyahu emphasized that he will continue operating against Hezbollah in Southern Lebanon.  

Rising uncertainty over a possible Iran-US peace deal and fears of a total closure of the Strait of Hormuz could lift the WTI price. On the other hand, hopes for US-Iran peace negotiations could weigh on the black gold. 

The release of the American Petroleum Institute (API) report will be published later on Tuesday. A larger-than-expected crude oil inventory draw indicates stronger demand and could lift the WTI price, while a bigger build than estimated signals weaker demand or excess supply, which might weigh on the WTI price.