Crude oil prices retreated sharply from the day’s highs in Tuesday’s trade as renewed hopes of a peace agreement in the Middle East eased concerns over supply disruptions. Optimism resurfaced after US Treasury Secretary Scott Bessent expressed confidence that a deal to reopen the Strait of Hormuz could be reached soon.
“We’re in talks with the Iranians, and I think there is a chance we may have a deal today or tomorrow to open the strait,” Bessent told CNBC. Asked whether maritime traffic would face a toll, he replied, “I think it would be freedom of movement.”
Bessent’s comments restored investor confidence and triggered a sharp reversal in oil prices, which had earlier surged by as much as 3%.
Brent crude, the international benchmark, fell 5% to the day’s low of $79.5 per barrel, while WTI crude futures dropped 5.1% to $75.81 per barrel.
Brent has swung sharply between $72 and $102 per barrel since July, reflecting heightened uncertainty over when oil tankers would be able to resume normal operations through the Persian Gulf following the conflict with Iran.
This is not the first time hopes of de-escalation have emerged. Similar optimism has surfaced multiple times since the conflict began in late February, only for tensions to escalate again each time.
Fresh diplomatic push lifts market hopes
Bessent’s remarks echoed comments made by US President Donald Trump on Monday, when he said the waterway could reopen within hours after stepping back from threats of a large-scale military strike against Iran over the weekend.
US Secretary of State Marco Rubio also said on Tuesday that Washington was “involved” in negotiations between Oman and Iran aimed at increasing shipping traffic through the strait.
However, Iran’s Foreign Ministry reportedly denied that negotiations with Washington were underway. Adding to the uncertainty, AFP reported that an unidentified projectile struck a cargo ship in the Strait of Hormuz on Tuesday, underscoring the fragile security situation in the region.
During the conflict, Iran tightened its control over the Strait of Hormuz as US forces intensified attacks on Tehran. Earlier, Iran had reportedly rejected Oman’s proposal to reopen the waterway and sought to retain control over the inbound shipping lane and part of the outbound route.
Strait of Hormuz remains at centre of US-Iran conflict
The latest developments follow weeks of military escalation between the US and Iran after Tehran launched attacks on American military installations across the Middle East.
Since tensions intensified, investors have closely monitored developments surrounding the Strait of Hormuz due to its strategic importance to global energy supplies.
Although the US and Iran signed an interim agreement in June, hostilities resumed last month over disagreements on reopening the Strait of Hormuz, which Iran had effectively closed during the conflict.
On 8 July, President Trump declared that the ceasefire agreement with Iran was “over” and described further engagement with Tehran as “a waste of time.”
(With inputs from agencies)
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