Oil prices sink amid US-Iran peace talks

Oil prices have fallen back further towards levels seen before the Iran war started as the US waived sanctions on Iranian oil amid progress in talks to agree a lasting peace deal.

Brent crude dropped nearly 2% to $76.4 a barrel at one stage in morning trading on Tuesday, hitting a fresh low since early March and edging closer to the $72 a barrel level seen before the US-Israel war on Iran began on February 28.

The latest decline follows the US Treasury issuing a 60-day licence waiving sanctions on Iranian oil as part of the interim agreement to end the war, allowing oil from Iran to flow into the US.

US vice president JD Vance said lengthy talks with senior Iranian officials in Switzerland had created a "good foundation" for a final peace deal as both sides look to bring a permanent end to the war.

The US and Iran signed an interim peace deal last Friday lasting 60 days, but negotiations for a long-lasting agreement had initially been thrown off course in response to continued fighting between Israel and Iran-backed Hezbollah militants in southern Lebanon.

Lower crude costs will come as a relief worldwide after wholesale oil and energy prices have been sent soaring since the conflict started.

Oil prices hit $120 a barrel at one stage as the vital Strait of Hormuz was effectively blocked, closing a shipping route that normally carries a fifth of the world's oil and gas supplies.

The interim peace deal sees Iran agree to reopen the strait and it is understood that dozens of ships passed through it over the weekend, though the main route is still mined and closed.

But in the wider financial markets, stocks came under pressure after heavy falls overnight on Wall Street and Asia after Elon Musk's recently-floated SpaceX saw heavy share price falls.

The FTSE 100 Index in London was 0.9% lower at 10342.06 in early trading on Tuesday, following a 16% drop for SpaceX on America's Nasdaq.

Chris Beauchamp, chief market analyst at IG, said: "SpaceX's reversal has arrived, bringing the shares back down to earth and causing euphoric sentiment to sputter.

"And just as inevitably, the losses are of such a size that they cannot be ignored by the broader market."

He added: "It is a necessary corrective in sentiment, and should in theory make the shares even more attractive, but emotions don't work like that.

"Instead of hopes that the shares will keep rocketing, we have the fear that they will go down even more."