U.S. oil prices continued their recent fall on Tuesday, with West Texas Intermediate (CL=F) futures settling at their lowest level since January 25.
WTI, the U.S. benchmark price, fell more than 3% during the session, settling at $86.53 per barrel, the lowest close since the $85.60 seen on January 25th. The January 3 closing price of $76.03 per barrel for WTI crude remains this year's closing low.
Brent crude futures (BZ=F), the international benchmark, also slid on Tuesday, falling more than 2%.
The declines come on the prospects of an Iranian nuclear deal, which would mean more oil entering the market at a time when data suggests a slowdown in the global economy.
"If a deal with Iran is reached, the implications for the oil market and Russia could be far reaching," Andy Lipow of Lipow Oil Associates said in a recent note to investors.
Oil has fallen sharply in the last several weeks amid fears of a recession in the U.S, and on-and-off lockdowns in China.
"The market is also concerned about weakness in the Chinese economy. July crude oil imports into China were about 10% less than July 2021," wrote Lipow.
The Biden administration is also planning a cap on Russian oil, a move aimed at preventing a spike in energy prices amid Western sanctions on Russia. U.S crude futures rose above $120/barrel in March after Russia invaded Ukraine, with prices again topping $120 in early June.
Consumers are also benefiting from lower oil prices, as gasoline prices have come off their all-time June highs. Retail gasoline prices now sit at $3.95 per gallon, according to AAA. In mid-June, the average cost of a gallon of gas in the U.S. topped $5 for the first time.
The latest Consumer Price Index (CPI) showed a moderate slowdown in inflation, reflecting a drop in energy prices. Prices in July rose 8.5% year-over-year, less than what economists had expected, and down from 9.1% in the prior month's reading. Compared to the prior month, consumer prices were unchanged in July.
WTI remains up 13% year-to-date, while Brent crude has gained 16% during the same period.
The Energy sector (XLE) remains the year's best performer, up nearly 40% year-to-date.
Ines is a markets reporter covering equities. Follow her on Twitter at @ines_ferre