US-Iran war: Oil prices edged higher on Tuesday after witnessing a sharp decline in the previous session, as concerns over potential supply disruptions in the Middle East persisted amid the ongoing US-Iran conflict. Despite diplomatic efforts, hopes for a quick resolution remained limited, keeping markets cautious over the impact on crude shipments.
Brent crude futures for the front month gained 0.7% to $84.39 per barrel after tumbling 7% in the previous session to a three-week low. Meanwhile, US West Texas Intermediate (WTI) crude also rose 0.7% to $80.95 per barrel, recovering from a more than 5% drop that had pushed prices to their lowest level in nearly a week.
What’s driving crude oil prices today?
Oil prices declined after US President Donald Trump said on Sunday that he was delaying any further military action against Iran while diplomatic efforts continued to end the conflict and resolve disputes over the strategically important Strait of Hormuz. The vital shipping route connects Gulf oil producers to global markets and, before the conflict, handled nearly 20% of the world’s daily oil consumption.
However, Iran dismissed Trump’s remarks on Monday. Foreign Ministry spokesperson Esmail Baghaei said there were no ongoing negotiations with the US and no meetings had been planned.
The Strait of Hormuz continues to remain a major sticking point. The US maintains that the memorandum of understanding signed in June required Iran to reopen the waterway, while Tehran insists the agreement explicitly safeguarded its authority over the strait.
Meanwhile, shipping activity in the region remains disrupted. According to shipping data, six Saudi-flagged supertankers recently altered their routes in the Gulf of Aden and are now sailing towards southern Africa, while two Saudi oil tankers successfully crossed the Bab el-Mandeb Strait.
Traffic through the Strait of Hormuz, located between Iran and Oman, has also slowed following reports of attacks on commercial vessels. Adding to security concerns, the United Kingdom Maritime Trade Operations (UKMTO) said on Tuesday that it received reports of an incident about 20 nautical miles (37 km) northeast of Oman’s Al Khasab, after a cargo ship reported over VHF Channel 16 that it had been struck by an unidentified projectile.
(With inputs from Reuters)
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