Oil drops after signs of negotiation between Tehran and Washington, but recent surge impacts gasoline in the US and Chile

Oil prices fell this Monday after signals of renewed negotiations between Tehran and Washington, though recent gains have impacted gasoline prices in the United States and Chile. According to reports from La Tercera, the drop followed statements from Iran’s Foreign Ministry spokesperson, Esmail Baghaei, who indicated that talks with the United States could resume based on national interests. During a press conference, Baghaei noted that intermediaries had continued exchanging messages with Iran amid the latest round of U.S. attacks and following U.S. military losses. The benchmark Brent crude oil price for delivery in September dropped 2.29% to $86.18, while New York's West Texas Intermediate (WTI) crude for August delivery declined 2.21% to $80.12. Meanwhile, U.S. forces carried out their ninth consecutive night of strikes targeting Iranian assets. In a statement posted on X, the U.S. Central Command (CENTCOM) emphasized that these attacks would continue to erode Iranian military capabilities used to target commercial ships and civilian mariners passing through the Strait of Hormuz. This escalation has reignited concerns over the security of one of the world’s most critical oil transit routes. The Strait of Hormuz accounts for roughly 20% of global oil transportation, yet shipments have sharply declined due to the ongoing cycle of attacks. The Islamic Revolutionary Guard Corps (IRGC) has maintained full control over the strait and reiterated its pledge that “not a single drop of oil, gas, or chemical fertilizer will pass through this maritime route,” according to the semi-official Iranian news agency Tasnim. Gasoline prices in the United States have climbed back to $4 per gallon, according to the American Automobile Association (AAA). This follows persistent instability in the strategically vital Strait of Hormuz. CNBC reported that the average national price for regular gasoline reached $4 or more last time on June 17, when the U.S. and Iran signed an interim agreement aimed at reopening the waterway and halting hostilities. In Chile, similar trends are emerging. After two sharp declines of over $100 in fuel prices, the recent rise in international crude oil prices is expected to push local gasoline prices higher. Analysts anticipate a jump of approximately $30 in the value of gasoline by the end of July. According to Josefine Romo, a researcher at Clapes-UC, the deterioration in the geopolitical situation has partially reversed the earlier decline in oil prices following the temporary ceasefire between the U.S. and Iran. If this scenario persists, she notes, gasoline and diesel prices could see an increase during the adjustment on July 30. Experts now expect that the price of gasoline will rise by an average of $30 during the week of July 30, assuming the Price Stabilization Mechanism for Fuels (Mepco) operates under normal rules rather than the recent changes implemented by the Treasury, which allows for faster price transfers. These developments underscore the growing volatility in energy markets driven by regional tensions and their broader economic implications.