Oil sector stocks in Hong Kong extended their losses. At the time of writing, PetroChina Co Ltd (HKEX: 00857) was down 2.51% at HK$8.93. CNOOC Ltd (HKEX: 00883) fell 2.43% to HK$21.66. Sinopec Corp (HKEX: 00386) declined 1.44% to HK$4.10, while China Oilfield Services Ltd (HKEX: 02883) dropped 1.33% to HK$6.68.

The decline follows a significant pullback in international oil prices on Monday, driven by the easing of Middle East geopolitical tensions and the U.S. announcement of a temporary relaxation of sanctions on Iranian oil. Brent crude for August delivery fell 3.3% to settle at $77.90 per barrel.

U.S. Treasury Secretary Janet Yellen announced via social media on the 22nd that, as part of the U.S.-Iran negotiation framework, the Treasury Department has issued a 60-day general license authorizing the production, delivery, and sale of Iranian petroleum.

Market expectations suggest that oil inventories from Middle Eastern producers will flow into the international market via the Strait of Hormuz, increasing supply in the near term.