Brent futures for July settled down 82 cents, or 0.73%, at $111.28 a barrel

Oil prices settled lower on Tuesday after US Vice President JD Vance said the US and Iran had made progress in talks, with neither side wanting to see a resumption of military action.

We think that we’ve made a lot of progress. We think the Iranians want to make a deal, Vance told reporters.

Brent futures for July settled down 82 cents, or 0.73%, at $111.28 a barrel.

Even with Tuesday’s dip, price remained higher. On Monday, Brent hit its highest since May 5.

We continue to have significant amounts of oil offline and with the regional infrastructure being in the crosshairs we are just holding our breath here until either we get a deal or another round of action, so a pretty significant binary outcome awaits, said John Kilduff, partner at Again Capital.

The Middle East war has effectively closed the Strait of Hormuz, a crucial waterway that typically carries daily around a fifth of global supplies of oil and liquefied natural gas, creating the world’s biggest oil supply disruption, according to the International Energy Agency.

Chinese state refiners have slashed oil throughput by more than 1 million barrels per day since the outbreak of the Iran war, analysts and market sources said, as disruption to crude supplies and poor margins forced them to scale back operations.

Chinese state refiners are processing 8.4 million barrels per day of crude this month, down from 8.6 million bpd in April and 9.5 million bpd in March, according to consultancy Energy Aspects. That compares with around 10 million bpd before the US and Israel attacked Iran at the end of February.