Oil prices climbed back Tuesday following concerns that a preliminary peace agreement between the U.S. and Iran lacks critical details, and that restoring the flow of oil through a vital shipping corridor could take much longer than initially expected.
Brent crude futures edged up 26 cents, or 0.3%, reaching $83.42 per barrel, while U.S. West Texas Intermediate rose 46 cents, also 0.3%, to $81.12 per barrel, as of 0108 GMT.
The rebound came after oil prices plunged nearly 5% on Monday — hitting their lowest closing level since March 4 — following an announcement by U.S. President Donald Trump that a memorandum of understanding had been signed to bring an end to the U.S.-Israeli war with Iran. The conflict had shut down the Strait of Hormuz, a waterway that normally carries one-fifth of the world’s oil supply, and caused roughly 14 million barrels per day of oil production to be halted.
While the announcement sparked initial optimism, the full contents of the memorandum have not been made public, and a permanent truce has not yet been established. Early reports suggest the deal would reopen the Strait of Hormuz and put a 60-day ceasefire in place, giving negotiators time to work through complex issues such as the future of Iran’s nuclear program.
Iranian President Masoud Pezeshkian described the memorandum Monday as an “important step” toward ending the fighting, but acknowledged that a lasting peace agreement “has yet to take shape.”
A senior Iranian official also said Monday that, pending a final deal, Iran would pause its nuclear activities — halting further uranium enrichment and stopping any expansion of its nuclear facilities.
Market analysts cautioned that investors remain wary until more information becomes available. “The devil may be in the details, and until those details emerge, the market is likely to show restraint regarding the further unwinding of the risk premium in energy markets,” said Tim Waterer, chief market analyst at KCM Trade.
Questions also remain about how quickly oil production and shipping can return to normal, even if the agreement holds. “The path back to normal supply flows remains far from straightforward,” said Tony Sycamore, market analyst at IG.
Sycamore elaborated, noting that “clearing mines, restoring full marine insurance coverage, and getting vessels and operators comfortable enough to return to the Gulf will all take time as will bringing shuttered wells and damaged regional infrastructure back online.”
