Oil prices pulled back from recent highs, erasing some of the previous day's 4% gain as traders sought clarity on complex negotiations between Iran and the US after renewed hostilities set back efforts to reopen the Strait of Hormuz.
Brent crude futures fell $1.42, or 1.43%, to $98.16 a barrel, while US West Texas Intermediate crude lost $1.66, or 1.77%, to $92.23 a barrel.
Oil surged yesterday after the US military carried out new strikes in Iran, hurting hopes over the weekend that the United States and Iran would reach an agreement to end the war.
Iran said the United States had violated a ceasefire by striking targets near the contested Strait of Hormuz, while the US said its strikes were defensive in nature.
Following an April ceasefire in the three-month long conflict, both sides indicated they had made progress on talks toward reopening the Strait, a key conduit for global oil and gas flows. But rising hostilities now threaten those negotiations.
Israel ramped up bombing on Lebanon on Tuesday, further straining peace efforts.
Nevertheless, the news that some LNG tankers have passed through the strait in recent days lifted expectations that the waterway might reopen soon, which would add to global supply.
