Oil prices moved lower on Monday amid signs of progress in negotiations between the United States and Iran.
While renewed warnings and threats from US President Donald Trump initially supported crude prices, the market retreated in response to indications that both sides had agreed on a roadmap to reach a broader agreement within the next two months.
The improving diplomatic backdrop continues to reinforce expectations that energy flows through the Strait of Hormuz will gradually normalise, although they remain below pre-tension levels at the moment.
Looking ahead, oil markets are likely to remain driven by the pace of diplomatic progress and the recovery of Middle Eastern energy export volumes.
Continued improvements in negotiations could place further downward pressure on prices as additional supply returns to the market. However, any disruption to the current diplomatic process could quickly revive volatility and support crude prices once again.
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