Oil prices experienced a modest decline on Tuesday as traders assessed the likelihood of supply disruptions following U.S. guidance for vessels navigating the Strait of Hormuz, which maintained focus on the ongoing tensions between Washington and Tehran. Brent crude oil futures experienced a decline of 25 cents, equivalent to 0.4%, settling at $68.79 per barrel as of 0102. U.S. West Texas Intermediate crude declined by 23 cents, representing a decrease of 0.4%, settling at $64.13. Following a rise of over 1% on Monday, the U.S. Department of Transportation’s Maritime Administration recommended that U.S.-flagged commercial vessels maintain a significant distance from Iran’s territorial waters and advised them to verbally refuse permission to board if approached by Iranian forces.

Approximately 20% of the world’s oil supply transits through the Strait of Hormuz, situated between Oman and Iran, which renders any escalation in this region a significant threat to global oil availability. Iran, in conjunction with its OPEC counterparts Saudi Arabia, the United Arab Emirates, Kuwait, and Iraq, predominantly channels its crude exports through the strait, primarily targeting the Asian market. The guidance was issued despite Iran’s top diplomat stating last week that Oman-mediated nuclear talks with the U.S. were off to a “good start” and set to continue.

Despite the cautiously positive tone emerging from discussions in Oman, persistent uncertainty regarding the potential for escalation, tightening sanctions, or supply disruptions in the Strait of Hormuz has maintained a modest risk premium, according to Tony Sycamore, an analyst. Meanwhile, the European Union has proposed extending its sanctions against Russia to include ports in Georgia and Indonesia that handle Russian oil, marking the first instance in which the bloc would target ports in third countries, as indicated by a proposal document reviewed by Reuters.

The action is a component of broader initiatives aimed at intensifying sanctions on Russian oil, which serves as a crucial revenue stream for Moscow, in light of the ongoing conflict in Ukraine. Indian Oil Corp acquired six million barrels of crude from West Africa and the Middle East, according to traders, as the Asian nation avoided Russian oil amid New Delhi’s efforts to negotiate a trade agreement with Washington.