Oil prices fell on Tuesday, reversing gains from the previous session, heading for further monthly declines, as investors awaited potential US-Iran talks in Doha amid a tense temporary ceasefire in the four-month-old war.

Brent crude futures for August delivery, which expired on Tuesday, fell by 1%, or 75 cents, to $72.4 per barrel. These levels are about $20, or 22%, lower than last month's close. The more actively traded September contract fell 0.6%, or 45 cents, to $73.46 per barrel.

US West Texas Intermediate crude for August fell 0.8%, or 57 cents, to $70.18 per barrel. The price is expected to drop about $17, or 19%, from the close on May 29.

Both Brent and WTI have returned almost to pre-war levels of February 27. Tim Waterer, chief market analyst at KCM Trade, said: "Investors are expecting positive outcomes from the Doha talks, although the return of oil flows through the Strait of Hormuz to normal is not yet clear." He added: "The market is cautiously optimistic, but it is still holding back on bets until we see concrete signs of de-escalation."

Iranian Deputy Foreign Minister Kazem Gharibabadi told state television on Monday that Iranian and Omani experts will begin talks in the coming days to re-determine transit routes through the Strait of Hormuz, adding that his country will seek to prevent ships from passing outside the designated routes.

With increasing pressure on prices, some analysts expressed concerns about demand from China. Neil Crosby, head of research at Sparta Commodities, said: "We are waiting for more evidence of higher Chinese purchases, but we cannot yet predict a significant return to the market from the world's largest crude oil importer."

Meanwhile, Middle East producers continue to load oil and liquefied natural gas despite new attacks on ships in the Strait of Hormuz and renewed strikes between the US and Iran in recent days, according to shipping data. Shipping activity last week reached its highest level since the conflict began in late February.

Meanwhile, Asia's seaborne crude oil imports rose slightly in June, but remained near their lowest levels in more than a decade, as the Iranian conflict affected shipments from the Middle East.

Data from commodity analysis firm Kpler indicates that the region, the largest oil importer, is expected to receive 20.71 million barrels per day (bpd) in June, up slightly from 20.39 million bpd in May, and an increase of nearly 2 million bpd from 18.77 million bpd in April, which was the lowest level since November 2015.

However, despite the slight recovery in volumes during May and June, Asia's imports remain well below the average of 26.79 million bpd for the three months before the February 28 attacks by the US and Israel on Iran.

The conflict led to the effective closure of the Strait of Hormuz, the narrow waterway between Iran and Oman, through which about 20% of the world's crude oil and refined products transited before the war.

The 60-day ceasefire

The 60-day ceasefire agreed between the US and Iran was supposed to fully reopen the strait, but ship traffic remains well below pre-war levels amid Iranian attacks on some vessels.

The volume of crude oil flowing through the Strait of Hormuz has increased in recent days, but Kpler estimates that only 2.79 million bpd will be exported in June, up from 881,000 bpd in May, but less than one-fifth of the average of 15.58 million bpd for the three months before the conflict began.

The remaining question is whether Middle East crude oil exports will return to pre-war levels, and if so, how long will it take? Crude oil futures prices indicate no supply problems. However, refined product prices in Asia tell a slightly different story, as they remain above pre-war levels, with refineries processing expensive crude bought from outside the Middle East at the height of the conflict.

Singapore gasoil, the key component of diesel, settled at $111.15 per barrel on Monday, up 22% from the close of $91.42 on February 27. Gasoline settled at $100.42 per barrel on Monday, a 26.6% increase from $79.30 on February 27.

Refined product prices are likely to fall in the coming weeks as more crude oil arrives in Asia. But much will depend on how quickly import volumes return to levels close to those before the Iranian conflict.

The Strait of Hormuz remains an unresolved factor, as Iran seems determined to assert control over it, facing opposition from the administration of President Donald Trump, as well as Gulf crude oil exporters such as Kuwait, Saudi Arabia, and the United Arab Emirates.

This means that uncertainty over the strait's safety will likely persist, restricting tanker movements as owners and insurers worry about potential attacks. Another uncertain factor is what China will do in the coming months.

The world's largest crude oil importer has mitigated the impact of restricted flows through the Strait of Hormuz by sharply reducing imports. Kpler expects China's seaborne crude oil imports to reach only 5.80 million bpd in June, down from 6.80 million bpd in May, making these two months the weakest since November 2015.

This means China's seaborne imports are half the average of 11.39 million bpd for the three months before the conflict. But with crude oil prices back to pre-war levels, Chinese refineries are likely to start buying cargoes again, although these shipments will not be delivered until August.

Overall, uncertainty remains high in the Asian crude oil market. If China returns to buying the same volumes of crude oil it did before the Iranian war, will that tighten the crude oil market, especially if flows through the Strait of Hormuz do not rise as much as the futures market expects?

What will happen to crude oil supplies once the current boost from inventory releases in countries like the US and Japan ends? So far, crude oil markets have shown remarkable resilience and adaptability in the face of disruptions from the Iranian war. The question is: will this continue?

In market developments, in the United States, President Donald Trump urged gasoline station retailers to lower prices, warning of emerging problems if they do not respond, and called for an investigation into gasoline price 'manipulation'.