CNBC_ Oil prices fell during Tuesday's trading session amid growing hopes for diplomatic progress between the United States and Iran, despite ongoing security escalation in the Middle East and attacks on oil tankers and energy infrastructure.
Brent crude futures fell 76 cents, or 0.69%, to settle at $108.79 a barrel.
US crude futures dropped $1.87, or 1.80%, to settle at $101.79 a barrel.
Middle East developments remained at the forefront of market attention, with escalating attacks on commercial vessels transiting the Strait of Hormuz in recent weeks.
Data from Kpler showed that at least 18 vessels have been attacked over the past two weeks.
The Iranian Islamic Revolutionary Guard Corps (IRGC) stated that two "non-compliant" oil tankers caught fire in the strait after colliding with mines laid by a naval unit affiliated with the Guard, according to Tasnim news agency.
Iranian Foreign Ministry Spokesman Esmail Baghaei affirmed that Tehran will respond to any US strike "in kind or with greater force."
In contrast, US President Donald Trump announced earlier this month that US forces would not attack Iran before the midterm elections scheduled for November 3.
PVM Oil Associates analyst Tamas Varga said the strength of near-term West Texas Intermediate (WTI) contracts reflects tight supplies in the global oil market.
He explained that the decline in Middle East exports resulting from attacks on tankers and strikes targeting Saudi oil infrastructure has contributed to market tightening.
He added that the US decision to exempt the Russian tanker fleet from certain sanctions could help lower shipping costs, which may support demand for US crude as an alternative to crude originating from the Middle East.
Varga pointed out that markets are also awaiting US inventory data, amid expectations of a decline in commercial crude inventories over the past week.
Oil prices continue to fluctuate between fears of supply disruptions in the Middle East and hopes for political de-escalation, as investors monitor geopolitical developments and their potential impact on global crude flows.
