Oil prices edged higher on Tuesday, clawing back some ground after a sharp decline the previous session, as markets processed the latest developments in U.S.-Iran peace negotiations and kept a close eye on oil traffic through the Strait of Hormuz.
Brent crude futures climbed 24 cents, or 0.38%, to $78.15 per barrel, while U.S. West Texas Intermediate crude rose 33 cents, or 0.46%, reaching $74.19 per barrel as of 0026 GMT.
Monday’s decline of more than 3% came after the United States extended a 60-day sanctions waiver to Iran in the wake of early peace discussions, and as officials noted a pause in fighting in Lebanon connected to the broader agreement.
Those developments followed a tense weekend that had threatened to unravel the week-old deal. Tensions flared after U.S. President Donald Trump warned he would resume military action if Iran interfered with shipping in the Strait of Hormuz — a threat that came after Tehran declared the critical waterway closed.
Tim Waterer, chief market analyst at KCM Trade, noted that deep-rooted distrust between Washington and Tehran continues to weigh on market sentiment. “There remains a prevailing dose of market scepticism, rooted in deep-seated mistrust between Washington and Tehran, suggesting that any return to pre-war oil prices is likely to be delayed rather than immediate,” he said.
On Monday, Trump posted to Truth Social that Iran would agree to weapons inspections to ensure what he called “nuclear honesty.” He later told reporters, “If Iran doesn’t live up to their agreement, or if they’re not behaving, I will do what I have to do.”
Waterer also noted that while traders had initially priced in optimism about a potential reopening of the Strait of Hormuz, sentiment has shifted. “The market had priced in optimism around the roadmap and potential Strait of Hormuz reopening, but traders are now taking a more measured approach as they await concrete evidence that the deal will hold and traffic will normalise,” he said.
Ship-tracking data showed two oil tankers carrying just under 2 million barrels sailed through the Strait of Hormuz on Monday — an encouraging sign after weaker traffic on Sunday driven by safety concerns about the passage.
In a separate development, data from the Department of Energy released Monday revealed that U.S. crude stockpiles held in the Strategic Petroleum Reserve dropped to 331.2 million barrels last week — the lowest level recorded since June 1983 — as the U.S.-Iran conflict continued to strain supplies.
