Oil prices recovered modestly on Tuesday after suffering steep losses a day earlier, as investors weighed ongoing risks to Middle East energy supplies despite signs of a pause in the conflict between the United States and Iran.
Brent crude futures rose 0.7 percent to $84.39 a barrel, while US West Texas Intermediate crude also gained 0.7 percent to $80.95 a barrel in early trading. The rebound followed Monday’s sharp selloff, when Brent tumbled 7 percent and WTI fell more than 5 percent after US President Donald Trump said he was delaying further military action against Iran while leaving the door open for diplomacy.
However, hopes of easing tensions faded after Iran rejected Trump’s claim that negotiations were underway. Foreign Ministry spokesman Esmail Baghaei said there were no talks with Washington and no meetings had been planned.
Analysts said the market remains highly sensitive because of uncertainty surrounding the Strait of Hormuz, one of the world’s most important oil shipping routes. Around one fifth of global oil consumption normally passes through the narrow waterway, making any disruption a major concern for energy markets.
Tim Waterer, chief market analyst at KCM Trade, said oil had lost some of its geopolitical premium after Trump’s comments, but warned the decline could quickly reverse if the conflict escalates or commercial shipping comes under renewed attack.
Fresh shipping data also highlighted continuing risks. Barclays said crude and refined product exports through the Strait of Hormuz averaged 4.2 million barrels per day in the week ending July 31, up from 3.2 million barrels the previous week.
Elsewhere, several Saudi oil tankers reportedly changed course near the Gulf of Aden, while vessel traffic through the Strait of Hormuz slowed following reports of attacks. The United Kingdom Maritime Trade Operations also reported that a cargo vessel northeast of Oman’s Al Khasab said it had been struck by an unidentified projectile.
Market watchers say continued security threats in both the Strait of Hormuz and the Red Sea are likely to keep oil prices supported, even if diplomatic efforts continue.
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