Oil prices fall as US-Iran pause eases supply concerns

New York: Oil prices declined in early trading on Sunday, extending losses from the previous session after the United States and Iran refrained from carrying out military strikes in the Gulf for a second consecutive day. Brent crude for September delivery fell 4.9% to $92.02 a barrel shortly after trading resumed, following a 3.9% decline on Friday. The international benchmark had briefly climbed above $102 a barrel last week, reaching its highest level since May amid concerns over escalating tensions in the Middle East and potential disruptions to global oil supplies. Oil prices surged throughout July as fighting in the region intensified, raising fears that a broader conflict could further disrupt the flow of crude oil through key shipping routes. The Strait of Hormuz remains a central concern for energy markets. The narrow waterway off Iran's coast handles roughly one-fifth of global oil shipments, and the conflict has significantly disrupted maritime traffic through the area. Oil producers have sought alternative export routes, but those have also faced challenges. Last week, attacks targeted Saudi oil tankers using the Red Sea route, adding to concerns about regional energy security. In the United States, the average price of regular petrol rose to $4.11 a gallon on Sunday, compared with $3.90 a month earlier and $3.15 a year ago, according to AAA. Analysts warn that sustained increases in oil prices could feed through to transportation and shipping costs worldwide, contributing to higher prices for consumer goods, including groceries. The recent rise in oil prices has also added to inflation concerns. Market data from CME Group indicates traders are now pricing in a 36% probability that the US Federal Reserve will raise interest rates at an upcoming meeting. Higher interest rates can help curb inflation but may also slow economic activity by increasing borrowing costs for consumers and businesses. US mortgage rates have already reached their highest levels in nearly a year, placing additional pressure on the housing market, while higher financing costs could also affect investment in sectors such as artificial intelligence infrastructure. Despite Sunday's decline, uncertainty remains in energy markets. US West Texas Intermediate crude for September delivery fell 5.6% to $84.34 a barrel after declining 3.1% on Friday. Meanwhile, Brent crude for October delivery, currently the most actively traded contract, dropped 4.6% to $87.48 a barrel.