Oil Prices Fall for a Second Day on Expectations US-Iran Talks May Resume

Oil Prices Slide Again Amid Hopes for Renewed US-Iran Talks and Supply Boost

Oil Market Reactions to US-Iran Developments and Supply Prospects

By Katya Golubkova

Recent Price Movements

TOKYO, April 15 (Reuters) - Oil prices fell for a second day on Wednesday on expectations peace talks between the U.S. and Iran may resume and eventually release supply from the key Middle East producing region trapped by the closure of the Strait of Hormuz.

Brent crude futures fell 52 cents, or 0.55%, to $94.27 a barrel at 0054 GMT after falling 4.6% in the previous session. U.S. West Texas Intermediate crude was down $1.04, or 1.1%, to $90.24 after dropping 7.9% the session before.

Geopolitical Context

Prospects for Renewed Talks

Talks to end the war between the U.S. and Israel and Iran could resume in Pakistan over the next two days, U.S. President Donald Trump said on Tuesday, after the collapse of negotiations over the weekend prompted Washington to impose a blockade on Iranian ports. This has increased optimism talks could eventually settle the conflict and open up crude oil and fuel flows.

Impact of Strait of Hormuz Closure

The war has shut the Strait of Hormuz, a key waterway for crude and refined product flows out of the Gulf to global buyers, particularly in Asia and Europe. 

Despite a two-week ceasefire, transit through the strait remains uncertain, with traffic at only a fraction of the 130 or so vessels that moved through the waterway before the war, sources said on Tuesday.

US Actions and Market Sentiment

A U.S. destroyer stopped two oil tankers from leaving Iran on Tuesday, a U.S. official said.  

"While diplomatic headlines suggest the possibility of renewed U.S.-Iran talks and even a temporary easing of transit restrictions, the physical reality remains fragmented," the Schork Group said in a note.

"The result is a market that continues to price optionality around flow disruption rather than a return to equilibrium."

Supply and Sanctions

Sanctions and Waivers

The market stands to lose some access to further supply after two U.S. administration officials told Reuters on Tuesday the U.S. will not renew a 30-day waiver of sanctions on Iranian oil at sea that expires this week, and quietly let a similar waiver on sanctions on Russian oil expire over the weekend.

Market Data and Inventory Reports

Upcoming Inventory Data

Later in the day, markets will be watching for official U.S. inventory data from the Energy Information Administration due at 10:30 a.m. ET (1430 GMT). 

Expectations and Recent Trends

U.S. crude oil stockpiles were expected to have risen slightly last week, while distillate and gasoline inventories likely fell, a Reuters poll showed. 

API Figures

Market sources familiar with American Petroleum Institute figures said on Tuesday U.S. crude oil inventories jumped for the third straight week. 

(Reporting by Katya Golubkova in Tokyo; Editing by Christian Schmollinger)