Oil prices largely flat as traders pin hopes on US-Iran peace

"We expect the MOU (memorandum of understanding) to hold, not because trust has suddenly emerged, but because the incentives to break are poor for both sides," Citi analysts said.

Some shipping has resumed through the Strait of Hormuz, as called for under the initial US-Iranian deal, but uncertainty is high after the two countries exchanged strikes last weekend following an Iranian attack on a cargo ship.

With the prospect of being able to ship more oil, Persian Gulf producers are working to increase output. OPEC output in June rose by 3.3 million barrels per day month-on-month, according to a Reuters survey.