Oil prices recovered on Tuesday after a sharp fall in the previous session, as fears over possible disruptions to Middle East energy supplies resurfaced amid uncertainty surrounding the U.S.-Iran conflict.
Investors remained cautious over the security of key oil routes, particularly the Strait of Hormuz, which plays a vital role in global energy trade.
Brent crude futures increased by $1.12, or 1.3%, to $84.89 a barrel by 0355 GMT after declining 7% on Monday to a three-week low. U.S. West Texas Intermediate (WTI) crude also rose 77 cents, or 1%, to $81.11 per barrel after falling more than 5% in the previous session.
Oil prices had dropped after U.S. President Donald Trump said he was delaying further attacks on Iran while discussions continued over ending the conflict and resolving disputes related to the Strait of Hormuz.
The strategic waterway, connecting Gulf oil producers with global markets, is one of the world’s most important energy routes and previously carried nearly one-fifth of global crude oil and natural gas shipments.
Iran’s Foreign Ministry spokesman Esmail Baghaei later rejected Trump’s claim, stating that no negotiations with the United States were underway and that no meetings had been scheduled.
Read More: Oil prices drop after Trump signals Iran talks
ING analysts said the previous market sell-off appeared excessive considering the ongoing uncertainty.
“The scale of the sell-off seems fairly overdone, given that there’s still considerable uncertainty,” the analysts said in a note, adding that previous diplomatic efforts had also failed after initial progress.
The dispute over the Strait of Hormuz remains a key issue in discussions between Washington and Tehran. The United States says a June memorandum required Iran to reopen the waterway, while Tehran maintains that the agreement preserved its control over the passage.
According to Barclays analysts, crude oil and refined product exports through the strait averaged 4.2 million barrels per day in the week ending July 31, up from 3.2 million barrels per day the previous week.
Shipping activity in the Red Sea has also been affected by regional tensions. Six Saudi-flagged supertankers recently changed routes in the Gulf of Aden toward southern Africa, while two tankers carrying Saudi oil crossed the Bab el-Mandeb Strait, according to shipping data.
The United Kingdom Maritime Trade Operations agency reported an incident on Tuesday involving a cargo vessel 20 nautical miles northeast of Oman’s Al Khasab. The vessel reported through VHF channel 16 that it had been struck by an unknown projectile.
Tim Waterer, chief market analyst at KCM Trade, said regional conflicts have increased shipping times, insurance costs, and operational challenges for energy companies.
“While the fighting between Saudi Arabia and the Houthis has not completely halted energy flows, it has forced longer voyage times, higher insurance costs, and occasional diversions,” Waterer said.
He added that risks around major shipping routes are keeping pressure on oil markets and limiting further price declines.
Global energy markets are expected to remain sensitive to developments in the Middle East as traders continue to monitor diplomatic efforts, security threats, and potential disruptions to oil supplies.
