Oil prices slipped on Tuesday as markets quickly reversed the previous day’s sharp gains, after Iran and Israel signalled a pause in their latest round of attacks following a call from US President Donald Trump for an immediate halt to hostilities. Even so, both sides warned the calm could be short-lived, keeping traders on edge.
Brent crude futures dropped 91 cents, or 1 percent, to $93.34 a barrel by 0400 GMT. US West Texas Intermediate fell $1.13, or 1.2 percent, to $90.17 a barrel.
The decline came just a day after prices jumped as much as 5 percent. That surge was driven by renewed Israeli strikes on Iran and attacks in Lebanon, which had raised fears of a widening regional conflict and a possible disruption to oil supply routes.
Sentiment shifted after Iran’s armed forces announced an end to their latest military response against Israel, following diplomatic pressure from Washington. The move offered some relief to energy markets, but traders remained unconvinced that tensions were truly easing.
“While there is some relief from the latest pause in direct strikes, investors are not convinced the truce will hold,” said Tim Waterer, chief market analyst at KCM Trade.
Iran and Israel both indicated they had stopped direct attacks after Trump urged them to “stop ‘shooting’”, though Tehran warned it could resume action if Israel continued strikes against Hezbollah in Lebanon. Israeli Prime Minister Benjamin Netanyahu, meanwhile, said Israel would respond forcefully if Iran attacked again.
Trump also told Axios that he had warned Netanyahu he could end up “fighting alone” if he restarted a conflict with Iran, highlighting growing pressure from Washington to avoid further escalation.
Despite the temporary pause, analysts say the broader situation remains fragile. “While this helped stop the situation snowballing, the geopolitical backdrop remains tense, and a lasting peace deal remains elusive,” said Tony Sycamore, market analyst at IG.
The focus is also turning to key maritime routes. Washington continues to push Tehran in wider talks over the possible reopening of the Strait of Hormuz, a critical channel through which about a fifth of global oil supplies once flowed before recent airstrikes disrupted activity in the region.
On Monday, US forces also disabled an unladen oil tanker in the Gulf of Oman after it allegedly tried to sail to an Iranian port in breach of restrictions, according to the US military.
With tensions still simmering and no clear political breakthrough in sight, oil markets remain highly sensitive to every development, with traders wary that any renewed fighting could quickly send prices climbing again.
