Meanwhile, Iran warns Europe against aiding any further U.S. military strikes: File Image/Pixabay.

The ephemeral hope that relations would improve between the U.S. and Iran this week at the United Nations – which caused a rise in crude of over 4 percent in the previous session - was dashed Tuesday when U.S. president Donald Trump stated that a peace deal might come after the U.S. midterm elections in November.

Trump also rekindled supply fears by adding that without a peace deal, he could “annihilate” the Islamic republic.

For its part, Iran warned European nations hosting U.S. military bases that facilitating attacks on the country would bring dangerous consequences. 

Brent on Tuesday dipped 40 cents to $99.94 per barrel by 1507 GMT, and West Texas Intermediate declined 36 cents to $95.43 per barrel.

All but overlooked by investors on Tuesday was increased transits through the Strait of Hormuz, which helped diffuse the significance of comments made by an Iranian official that his country would reopen the waterway within seven days if Washington eased military pressure and lifted its blockades of Iranian ports.

The official added that the Iranian delegation to the UN had full authority to revive diplomacy with the U.S., which some analysts thought was a sign that Trump’s hard line against the Islamic republic was working.

Although Tuesday’s events raised the spectre of potential supply shortages, the American Petroleum Institute estimated that in the U.S. at least, crude inventories rose by 1.7 million barrels in the week ending September 18.

This came on the heels of the previous week’s performance of inventories growing by an impressive 7.1 million barrels.

However, gasoline inventories fell 2.1 million barrels in the week ending September 18 compared to the week prior when they rose by 1.4 million barrels.

In other oil news on Tuesday, Saudi Arabia restarted its East-West oil pipeline, defying concerns by Goldman Sachs that recovery from attacks by the Iran-backed Houthis could take several months.

While the pipeline is running at a low rate, Saudi Aramco was working to return flows to roughly 4 million barrels per day (bpd), with a full restart possibly happening in a few weeks; meanwhile,
Reuters sources said tankers were being moved toward Egypt’s Port Said and Sidi Kerir for ship-to-ship transfers as Saudi flows return.

Also on Tuesday, India’s oil imports from Russia fell 16.5 percent in August and are expected to decline again in September, just as new U.S. sanctions allow Washington to slap 100 percent tariffs on major Russian oil buyers.

Indian refiners are reportedly tapping spot markets for replacement barrels as they weigh the risk attached to future Russian purchases.