Oil extends fall as investors await outcome of US-Iran negotiations

Before the war started, some 20% of the world's oil and liquefied natural gas transited through the strait, and in March alone prices rose 50%.

"The main sticking point appears to be whether Iran will continue to insist on a degree of control over the waterway, and whether the U.S. will stand its ground and refuse that outcome," IG analysts said in a note.

Trump and Qatar's Emir Sheikh Tamim bin Hamad Al Thani discussed efforts to narrow differences between Washington and Tehran and improve the prospects for a lasting settlement during a phone call on Tuesday, Qatar's Emiri office said.

U.S. crude and gasoline inventories rose while distillate stocks fell last week, market sources said on Tuesday, citing data from the American Petroleum Institute.

Crude stocks rose by about 2.7 million barrels in the week ended July 31, the sources said on condition of anonymity.

Official numbers from the U.S. Energy Information Administration are due at 10:30 a.m. ET (1430 GMT) on Wednesday.

Oil extended losses on Wednesday as investors waited to see if efforts to end the Iran war and restore traffic through the blockaded Strait of Hormuz were making progress.

Brent crude futures were down 32 cents, or 0.4%, to $79.04 a barrel at 0630 GMT. U.S. West Texas Intermediate futures dropped 58 cents, or 0.8%, to $75.19 a barrel.

Both benchmark contracts settled more than 5% lower on Tuesday.

Qatar said on Tuesday mediators were making progress in efforts to end the war, driving oil prices lower, although Tehran has denied U.S. President Donald Trump's assertion that talks are underway. Brent closed below $80 a barrel on Tuesday for the first time since July 13.