Oil prices fell more than 1% on Tuesday, extending losses from the previous session, on signs of some progress in restoring crude flows through the Strait of Hormuz following US-Iran peace talks.
Brent crude futures fell $1.09, or 1.4%, to $76.81 a barrel and US West Texas Intermediate declined to $72.99 a barrel, down 87 cents, or 1.2%, as of 0607 GMT.
Prices fell more than 3% on Monday after the United States granted Iran a 60-day sanctions waiver following initial peace talks, and as officials reported a lull in hostilities in Lebanon under the broader agreement, Reuters said.
“The gradual increase in oil flows through the Strait of Hormuz continues to weigh on the market,” said ING analysts in a note.
Two crude tankers with just under 2 million barrels of oil sailed through the Strait of Hormuz on Monday, ship-tracking data showed, in a sign that traffic was picking up following weaker flows on Sunday due to concerns over passage through the waterway.
“Transits over recent days look to have risen sharply, (which) the market will treat as a proxy for both physical oil, perhaps paper oil, and diplomatic progress,” said Sparta Commodities’ head of research Neil Crosby in a note. “It feels like we will be stuck in this bearish risk-off/optimistic mood until such time as something changes.”
The price declines come after a weekend that had appeared to put the week-old accord in jeopardy, including threats from US President Donald Trump to restart the war if Iran disrupted shipping through the Strait of Hormuz after Tehran declared the strategic waterway closed.
“There remains a prevailing dose of market skepticism, rooted in deep-seated mistrust between Washington and Tehran, suggesting that any return to pre-war oil prices is likely to be delayed rather than immediate,” said Tim Waterer, chief market analyst at KCM Trade.
Separately, analysts in a Reuters poll expect US crude inventories to have fallen last week, along with distillate and gasoline inventories.
On Monday, government data showed US crude stocks in the Strategic Petroleum Reserve fell to 331.2 million barrels last week, the lowest since June 1983, as supplies tightened in the wake of the US-Iran conflict.
China is preparing a second import terminal to handle liquefied natural gas cargoes from Russia’s sanctioned Arctic LNG 2 project, expanding a route that so far relies on a single facility, three sources with knowledge of the matter said.
The newly built Longkou LNG terminal in eastern China’s Shandong province, operated by state pipeline giant PipeChina, is being lined up to receive Arctic LNG 2 cargoes, the sources told Reuters.
The move would provide a lifeline to the $21 billion project, which is under heavy sanctions, and to Moscow, whose gas exports have been hit by Europe’s decision to halt purchases and whose oil sector faces pressure from Ukrainian attacks.
A second import terminal would allow China to take larger volumes of sanctioned Russian LNG, while giving Arctic LNG 2 – designed to produce 19.8 million metric tons a year – another export outlet.
China, the only known buyer of sanctioned Arctic LNG 2 cargoes, has so far received shipments through PipeChina’s Beihai terminal in Guangxi. That facility took the project’s first delivery to an offtaker in August 2025 aboard the Arctic Mulan tanker.
Since then, Beihai has received 41 cargoes, or 2.6 million tons, of LNG from Arctic LNG 2 – many via two floating storage units in Russia – according to ship-tracking data and Kpler estimates. It has also received three LNG cargoes from Russia’s sanctioned Portovaya terminal.
China needs an additional terminal to absorb more sanctioned cargoes, one of the sources said. All declined to be named as they were not authorized to speak to media.
The world’s largest LNG importer, China bought 7.57 million tons from Russia last year, according to Chinese customs data.
Longkou is seen as a logical choice because, like Beihai, it is operated by PipeChina and is closer to the Koryak floating storage unit in Russia’s Far East, where Arctic LNG 2 cargoes are stored and reloaded, the sources said.
An industry executive said Longkou has completed its mechanical build phase and should be ready before October, in time for peak winter demand.
Under its completed first phase, the Longkou terminal in the coastal city of Yantai has an annual receiving capacity of 5 million tons, compared with 6 million tons at Beihai.
PipeChina’s Dalian LNG terminal in northeastern China is also being discussed as a potential future receiving point, a fourth source said.
Novatek has recently stepped up hiring in China, a separate source said.
Reuters reported last year that Novatek has cut cargo prices by 30% to 40% since August 2025 to attract Chinese buyers despite sanctions.
Bank of America (BofA) expects the Federal Reserve to hike interest rates by 75 basis points in 2026, it said on Monday, citing resilient economic data and rising expectations of a hawkish Fed under new Chair Kevin Warsh.
BofA Global Research said in a note it expects the US central bank to raise rates in September, October, and December, compared with its prior forecast for no change this year, according to Reuters.
BofA’s view is contrary to current 2026 outlooks of top Wall Street brokerages and comes after the Fed left its benchmark rate unchanged earlier this month, even as almost half of Fed policymakers indicated that they now expect rates to rise this year.
The policymakers’ more hawkish outlook is accompanied by strength in the labor market and elevated inflation concerns.
“June Summary of Projections and Warsh’s comments indicate that the Fed’s reaction function is much more hawkish than we thought,” analysts at BofA said in a note.
In contrast to BofA’s call, markets are pricing in 42 bps of hikes in 2026, according to London Stock Exchange Group (LSEG) data.
After three rate hikes this year, BofA analysts expect the central bank to keep interest rates on hold in 2027.
“Inflation is likely to remain sticky, keeping the real policy rate from becoming overly restrictive,” they said.
Brokerages including BNP Paribas and Macquarie are also among the minority that expect the central bank to start hiking rates this year.
Saudi Arabia’s Yanbu Commercial Port achieved a new operational milestone by successfully serving 11 vessels simultaneously of various sizes and cargo capacities, reflecting the port’s high level of operational readiness, reported the Saudi Press Agency on Monday.
The achievement underscores the efficiency of the port’s operations and its ability to manage maritime and commercial traffic with a high degree of effectiveness.
It contributes to smoother import and export activities and supports the continuity of supply chains in accordance with the highest operational and logistical standards.
The accomplishment builds on the vital role of Yanbu Commercial Port in strengthening Saudi Arabia’s maritime transport system and reinforcing its position as a key logistics hub on the Red Sea coast.
It also supports economic growth and enhances the competitiveness of the maritime and commercial sectors.
