Oil prices ease as uncertainty clouds Iran-US peace talks

New Delhi: Oil prices eased on Tuesday, after an 8% rally in the previous session, as uncertainty over Iran-US peace talks left traders reassessing the risk of prolonged supply disruptions.

The August contract of Brent on the Intercontinental Exchange was trading at $94.33 per barrel early Tuesday, down 0.68% from its previous close. The July contract of West Texas Intermediate on the Nymex fell 0.67% to $91.54 a barrel.

Iran's semi-official Tasnim News Agency reported that Tehran had paused talks, citing continued Israeli military action in Lebanon. “Given the continuation of the Israeli regime’s attacks in Lebanon, and considering that Lebanon had been one of the preconditions for a ceasefire – which has now been violated on all fronts, including Lebanon – the Iranian negotiating team is suspending ‘talks and exchanges of texts through mediators,” the report said.

After reports of peace talks suspension by Iran, US President Donald Trump said he had urged Israeli Prime Minister Benjamin Netanyahu to withdraw troops from Lebanon’s capital, Beirut, and had spoken with Hezbollah representatives, who he said had agreed to halt attacks on Israeli forces.

However, Netanyahu's office later said Israeli strikes on Beirut would continue if Hezbollah kept targeting Israeli cities and citizens, while military operations in southern Lebanon would proceed as planned, according to Al Jazeera.

Meanwhile, Iran's chief negotiator and parliament speaker Mohammad Bagher Ghalibaf said in a social media post: "In my conversation with my brother, President Nabih Berri, I affirmed that if the Israeli aggression against Lebanon continues, we will not only halt the path of negotiations, but we will also be in direct confrontation with the enemy."

However, hours after reports on Iran suspending peace talks, Trump said on his Truth Social platform that indirect talks with Iran were continuing at a "rapid pace."

Crude prices surged on Monday as the renewed tensions revived fears that disruptions to global oil supplies could persist for a long time. Oil had eased in recent sessions on expectations of a possible de-escalation in West Asia, but those hopes faded following the latest developments.

The Indian crude oil basket was at $96.6 per barrel as of 29 May. The Indian crude basket comprises a derived basket comprising of sweet grade (Brent dated) and sour grade (Oman & Dubai average) of crude oil imported by Indian refineries.

Amid concerns over global supplies, the government said domestic refiners continue to operate at high utilisation rates with adequate crude inventories and sufficient stocks of petrol and diesel. Refiners have also increased LPG production to support domestic demand.

"All retail outlets are operating normally across the country. Unusually high sales and heavy crowding is observed at retail outlets in certain areas. However, it is informed that there are adequate stocks of petrol and diesel available at all petrol pumps in the country," said a petroleum ministry statement on Monday.