WTI tumbles below $70.00 as US and Iran agree to halt attacks, renew talks

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $69.60 during the early Asian trading hours on Monday. The WTI price falls after reports that the United States (US) and Iran have agreed to pause strikes and plan talks in Qatar on Tuesday. 

Washington and Tehran have agreed to end more than three days of retaliatory strikes in and around the Strait of Hormuz and engage in further technical talks on Tuesday in Qatar, according to an Axios report quoting unnamed US officials. 

This action came after US-Iran talks over the weekend were reportedly on hold after the US struck Iranian military targets in retaliation for Tehran’s latest strikes on shipping vessels in the Strait of Hormuz. The Islamic Revolutionary Guard Corps (IRGC) said its forces have destroyed eight US military sites in Kuwait and Bahrain, with the attacks described as retaliation for recent US attacks on Iranian facilities. 

Traders will closely monitor the developments surrounding US-Iran talks. Any progress in negotiations could restore oil flows through the Strait of Hormuz, which accounts for one-fifth of the world's supply flow. This, in turn, could drag the WTI price lower. On the other hand, any signs of escalating tensions in the Middle East could raise fears of oil supply disruption and boost black gold in the near term. 

The American Petroleum Institute (API) weekly crude oil report will be released 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 undermine the WTI price.