Investing.com-- Oil prices settled lower Tuesday, snapping a five-day winning streak on waning fears of the conflict in the Middle East could expand and threaten global crude supplies as a Iran retaliatory strike against Israel has yet to materialize.
At 14:30 ET (18:30 GMT), West Texas Intermediate crude futures fell 2.1% to $78.35 a barrel, while Brent oil futures expiring in October fell 2% to $80.69 a barrel.
Iran set to potentially delay retaliatory strike on Israel
Iran said only a Gaza ceasefire would avert it from striking Israel for the assassination of Hamas leader Ismail Haniyeh in Tehran, Reuters reported Tuesday, citing three senior Iranian officials.
If ceasefire talks fail, then Iran and its with allies such as Hezbollah, would launch a direct attack, an unnamed senior Iranian security official, told Reuters.
Still, signs of restraint from Tehran, which come against recent fears that a retaliatory strike on Israel was imminent, cooled fears of a broader regional conflict in the oil-rich Middle East.
Dollar fall on cooling inflation fails to help oil prices
The dollar fell sharply Tuesday following data showing that U.S. producer prices growth slowed more than expected on an annual basis in July. Yet, dollar weakness failed to support oil prices as easing geopolitical tensions took center stage.
As oil is priced in dollars, a weaker greenback tends to boost demand from non-dollar investors.
The inflation report comes a day before the more widely-watched consumer price index, which is expected to show inflation stayed at 3.0% on an annual basis in July, unchanged from June’s figure.
Traders are pricing in either a 25 or 50 basis point rate cut by the Federal Reserve in September, and cooling inflation could lead to a hefty rate cut.
(Peter Nurse, Ambar Warrick contributed to this article.)