Oil Holds Advance

WTI crude oil futures hovered around $64.2 per barrel on Tuesday, holding onto gains from the previous sessions amid lingering tensions between the US and Iran despite signs of progress in recent talks. On Monday, the US issued a warning to all American-flagged ships to avoid Iranian waters while transiting the Strait of Hormuz. The advisory came even as negotiations between the two nations are set to continue following what they described as positive talks in Oman last Friday. However, uncertainty remains over a potential breakthrough, as Iran continues to insist on maintaining uranium enrichment, a key sticking point for the US. Investors are also monitoring developments on India’s purchases of Russian crude, after the latest US trade deal with India was linked to a freeze on Russian oil imports. India is one of the largest buyers of Russian crude and any halt in purchases could significantly support oil prices.

WTI crude oil futures rose above $63.5 per barrel on Monday as markets continued to gauge their appropriate risk premium. US President Trump struck a degree of optimism over the negotiations with Iran regarding a potential deal on defusing Iran's uranium enrichment capabilities. Oil prices had soared in previous weeks after the escalating tensions between both countries drove markets to consider the risk of the US enforcing sanctions on Iranian oil to a greater extent and Iranian authorities intercepting tankers through the Strait of Hormuz. The growing risk premia offset the narrative that the oil market will remain oversupplied this year due to the cumulative output hikes from OPEC nations and strong productions from the US, Canada, and Brazil outside complementing the cartel. Lastly, oil imports were India were also uncertain as its trade deal with the US was attached with the halt of purchases from Russia, which has pushed back on major changes in contracts with Indian refiners.

WTI crude oil futures fell below $63 per barrel on Monday, extending last week’s decline, as concerns over US-Iran conflict eased after diplomatic talks. President Trump described the discussions as “very good,” while Tehran referred to them as a “step forward.” Both sides agreed to continue negotiations this week, alleviating fears of immediate supply disruptions. However, underlying tensions remain. Trump warned that consequences would be severe if a deal on Iran's nuclear program is not reached, while Tehran reiterated on Sunday that it will not abandon uranium enrichment. Elsewhere, traders are monitoring oil flows from India, after Trump announced last week that New Delhi had agreed to stop buying Russian oil as part of a trade deal, though India has yet to officially confirm the commitment, emphasizing that safeguarding its energy security remains a top priority. Investors also await OPEC+ and IEA reports later this week for further guidance on the market outlook.