HOUSTON: Oil prices dipped for a second straight day on Tuesday, as talks for a ceasefire in Gaza continued, but losses were limited to less than a dollar a barrel as Egyptian and Qatari mediators met resistance in their search to find a way out of the war.

The talks in Cairo, also attended by the director of the U.S. Central Intelligence Agency William Burns, have so far failed to reach a breakthrough towards pausing the war.

Hamas said an Israeli proposal on a ceasefire met none of the demands of Palestinian fighters factions, but it would study the offer further and deliver its response to mediators.

Oil falls on ME ceasefire talks

Brent crude futures edged down 67 cents, or 0.7%, to $89.7 per barrel by 11:09 a.m. ET (1509 GMT). U.S. West Texas Intermediate (WTI) crude futures were down 91 cents or 1% at $85.53.

On Monday, Brent posted its first decline in five sessions and WTI its first in seven as a fresh round of Israel-Hamas ceasefire discussions in Cairo raised hopes of a breakthrough.

On Tuesday, Gaza residents said Israeli forces kept up airstrikes on Deir Al-Balah in central Gaza and Rafah on the enclave’s southern edge on. Israeli Prime Minister Benjamin Netanyahu has repeatedly flagged plans for a ground assault on Rafah, where over one million displaced civilians are holed up, despite international pleas for restraint.

“Without an end to the conflict, there is an elevated risk that other countries, particularly Iran, OPEC’s third-largest producer, could be drawn into the war,” said Fiona Cincotta, Senior Financial Market Analyst at City Index.

Turkey announced on Tuesday that it would restrict exports of various products, including jet fuel, to Israel until there is a ceasefire. Israel said it would respond with its own curbs.

Adding to concerns of a tight market, Mexico’s state oil company Pemex said it would reduce crude exports by 330,000 barrels per day (bpd) in May so it can supply more to domestic refineries, cutting by a third the supply available to the company’s U.S., European and Asian buyers.

Pemex had already cut its April exports by 436,000 bpd.

Limiting oil price declines, overall fundamentals of tighter supplies remain unchanged, said Dennis Kissler, senior vice president of trading at BOK Financial.

“No one wants to be short crude”, Kissler said, citing OPEC’s supply cuts, reduction of fuel exports by Russia and geopolitical instability.

Russia has asked Kazakhstan to stand ready to supply it with 100,000 tons of gasoline in case of shortages exacerbated by Ukrainian drone attacks and outages, three industry sources told Reuters.

Investors are also awaiting inflation data due from the U.S. and China for further signals on the economic direction of the world’s top two oil consumers, as well as an interest rate decision from the European Central Bank on Thursday.

Vitol CEO Russell Hardy told a conference in Switzerland that he expected oil prices to trade in a range on $80-100 a barrel and oil demand growth of 1.9 million bpd in 2024.

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