Oil prices decreased on Tuesday with ongoing diplomatic efforts to achieve a cease-fire agreement in Gaza and uncertainty over the timing of the US Federal Reserve's (Fed) interest rate cut, while further price decline was limited amid worries over the potential impact of Hurricane Beryl on oil production in the Gulf of Mexico.
International benchmark Brent crude traded at $85.57 per barrel at 10.17 a.m. local time (0717 GMT), a decrease of 0.20% from the closing price of $85.75 per barrel in the previous trading session.
The American benchmark West Texas Intermediate (WTI) traded at $82.12 per barrel at the same time, a 0.25% fall from the previous session that closed at $82.33 per barrel.
Cease-fire talks in the Middle East, which is home to a vast majority of global oil reserves, relieve some supply concerns among market players and put downward pressure on prices.
The US State Department announced on Monday that Barbara Leaf, the US assistant secretary of state for Near Eastern affairs, is visiting the Middle East on July 8–14 to discuss a cease-fire deal in Gaza.
"The Assistant Secretary will meet with government officials on continued diplomatic efforts to achieve a cease-fire agreement, secure the release of all hostages, and ensure humanitarian assistance is distributed throughout Gaza," according to the State Department.
Meanwhile, Ronen Bar, the head of Israel's Shin Bet internal security services, and CIA Director William Burns arrived in Egypt on Monday for talks on a Gaza cease-fire and prisoner swap deal between Israel and the Palestinian group Hamas.
Also, ongoing uncertainties over the timing of the Fed interest rate cut continue to influence prices by raising demand concerns.
Analysts noted that although macroeconomic data continue to indicate a slowdown in the US economy, Fed officials still maintain their cautious stance on rate cuts. The probability of the Fed's first rate cut in September is 81% and 78% for November. The possibility of the bank cutting interest rates for the second time in December is 98%.
The upward trend in the US dollar against other currencies also dulled oil demand and supported price declines. A strong dollar is expected to reduce demand by making oil more expensive for foreign currency users. The US dollar index rose by 0.02% to 105.02 at 10.38 a.m. local time (0738 GMT).
However, the potential impact of Hurricane Beryl on oil production in the Gulf of Mexico limited further price declines.
It has been reported that more than 1 million households and businesses have experienced power outages due to the hurricane, which reached the Texas coast of the US with a "category 1" intensity.
The concern that some ports in the US might close down due to the hurricane fueled fears that the closure could temporarily halt exports of crude and liquefied natural gas, oil shipments to refineries, and deliveries of motor fuel from these facilities.
