Oil prices remained close to their recent highs on Tuesday as traders weighed conflicting signals over negotiations between the United States and Iran and watched closely for any developments involving the Strait of Hormuz, a key route for global energy supplies.
Brent crude edged up 6 cents to $95.04 a barrel in early trading, while US West Texas Intermediate (WTI) slipped 17 cents to $91.99 a barrel. Both benchmarks had surged more than 5 percent in the previous session as concerns over supply disruptions gripped the market.
Investor attention remains fixed on the future of US-Iran talks, which could play a major role in determining whether tensions in the Middle East ease or worsen in the coming days.
US President Donald Trump said on Monday that discussions with Tehran were still taking place, despite reports from Iran’s Tasnim news agency that indirect negotiations with Washington had been suspended.
The mixed messages created uncertainty in the market. While Trump later said he had not been informed of any halt in talks, he also remarked during a CNBC interview that he would not mind if negotiations ended. Hours later, he struck a more optimistic tone, saying discussions were continuing and expressing hope that a deal to extend the ceasefire and reopen the Strait of Hormuz could be reached within a week.
Analysts said the direction of oil prices will largely depend on whether diplomatic efforts make progress.
Tim Waterer, chief market analyst at KCM Trade, said traders are closely tracking developments in US-Iran relations, including comments from both governments, threats involving the Strait of Hormuz and the movement of oil tankers through the region.
According to Waterer, the outcome of the negotiations will determine whether the geopolitical risk premium currently built into oil prices remains in place or starts to fade.
The market is also monitoring broader regional developments. Lebanon announced a partial ceasefire between Hezbollah and Israel on Monday, offering a limited sign of de-escalation in a conflict that has added to instability across the Middle East.
Tony Sycamore, a market analyst at IG, said oil prices are likely to remain volatile as long as headlines continue to emerge from the region and until there is stronger evidence that a lasting peace agreement is within reach.
The Strait of Hormuz remains at the centre of market concerns. Since the outbreak of the conflict, Iran has largely restricted non-Iranian shipping through the Gulf, disrupting a route that handles roughly one-fifth of the world’s oil and liquefied natural gas trade. The supply concerns have helped push energy prices sharply higher.
At the same time, higher prices have boosted demand for US crude. Ship-tracking data showed American crude exports reached a record 5.6 million barrels per day in May as refiners in Asia and Europe sought alternative supplies.
Supply data from the United States also offered support to prices. A preliminary Reuters survey showed US crude inventories are expected to have fallen by around 3.6 million barrels in the week ended May 29. Stocks of gasoline and distillates are also projected to have declined.
Shipping industry executives meeting in Athens said any agreement between Washington and Tehran would need to provide clear guarantees and operating rules before commercial vessels can fully resume normal activity through the Strait of Hormuz.
For now, traders remain focused on diplomacy, with oil markets expected to react quickly to any signs of progress or setbacks in negotiations between the two countries.
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