Oil prices fall as investors continue to watch U.S.-Iran moves, Citi sees ‘overhang’ disappearing

International benchmark Brent crude futures for August fell 1.57% to $76.68 a barrel. U.S. West Texas Intermediate futures for August declined 1.53% to $72.73 per barrel.

The price of the commodity fell overnight after the U.S. Treasury issued a 60-day license that authorizes the production, delivery and sale of oil from Iran. It allows the importation of Iranian crude to the U.S., and payment for the oil to be made in dollars. The license expires Aug. 21.

However, there were concerns that Iran may use the profits from oil sales to rebuild its military. President Donald Trump was asked on Monday if he could ensure that such a scenario would not play out.

“Well, they’re not supposed to be doing that, so we’ll see,” Trump said at the White House during an executive order signing event. “They’re supposed to use money to buy food for their people, because right now their people are very hungry, and they’re buying it exclusively from us: corn, soybeans,” he added.

Vice President JD Vance said there has been “great progress” made during the talks in Switzerland, even as Iran declared over the weekend that it had closed the Strait of Hormuz. U.S. Central Command said Hormuz had not been closed.

The recent developments appear to have boosted investor optimism that there may be a lasting resolution.

“If you just follow the oil price trading pattern here over the past couple of weeks, you’re seeing the markets telling you that it’s increasingly confident that we’re closer to the end of the conflict,” said managing director of US Equity Strategy at Citi Research Scott Chronert on CNBC’s “Squawk Box Asia”.

“This energy price overhang with its inflation connotation should be lessening in the weeks and months to come,” he added.

—CNBC’s Dan Mangan and Spencer Kimball contributed to the report.