International crude oil benchmark Brent crude prices dropped 2 per cent in early trade on Tuesday as investor sentiment improved amid possible de-escalation signals between the United States and Iran.
Sentiment improved after US President Donald Trump postponed planned military strikes on Iran to allow more time for negotiations.
Despite the marginal decline, traders remained cautious as geopolitical tensions in the region continue to pose significant threats to global energy supplies.
Brent crude futures for July delivery dropped $3.01, or 2.7 per cent, to trade near $109.09 per barrel during early trading hours. Meanwhile, the US-based West Texas Intermediate (WTI) crude for June also declined $1.38, or 1.3 per cent, to $107.28 a barrel.
The crude futures for July also fell about $2.06, or 2 per cent, to around $102.32 per barrel.
Both benchmarks had touched their highest levels in several weeks during the previous session amid fears of escalating conflict in the Middle East.
President Donald Trump stated on Monday that there was a “very good chance” of reaching an agreement with Iran to prevent Tehran from developing a nuclear weapon.
Despite fresh signs of diplomatic engagement, concerns over supply disruptions remain very high amid the prevailing tensions in West Asia.
The Strait of Hormuz, which handles nearly 20 per cent of the global oil supplies, has effectively faced major disruptions since the war between Israel, the US and Iran began on February 28.
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