BY COMFORT OGBONNNA
Oil prices fell more than 1% on Tuesday, extending the sharp losses recorded in the previous session as signs of improving crude shipments through the Strait of Hormuz eased concerns about potential supply disruptions in global energy markets.
Brent crude futures dropped $1.09, or 1.4%, to $76.81 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 87 cents, or 1.2%, to $72.99 a barrel in early trading. The declines followed a more than 3% drop on Monday, as investors responded to developments stemming from recent U.S.-Iran peace negotiations.
Market sentiment improved after the United States granted Iran a 60-day sanctions waiver following the initial round of talks aimed at easing tensions between the two countries. Investors also took comfort from reports indicating a slowdown in hostilities in Lebanon under the broader diplomatic framework, reducing fears of a wider regional conflict that could threaten oil supplies.
A key factor weighing on prices has been the gradual restoration of shipping activity through the Strait of Hormuz, one of the world’s most important energy transit routes. The narrow waterway connects the Persian Gulf to global markets and carries a significant share of the world’s seaborne crude oil exports. Any disruption to traffic through the strait can quickly trigger concerns about supply shortages and drive oil prices higher.
Recent shipping data indicated that two crude tankers carrying nearly 2 million barrels of oil successfully passed through the Strait of Hormuz on Monday. The increase in vessel movements suggested that confidence among shipping operators was improving after traffic slowed over the weekend due to security concerns.
Analysts noted that rising tanker activity is being viewed by the market as a sign of both improving physical oil flows and progress on the diplomatic front. The resumption of shipments has helped calm fears that supplies from the Middle East could face prolonged interruptions.
However, traders remain cautious despite the recent decline in prices. Market participants continue to monitor developments closely, particularly given the fragile nature of relations between Washington and Tehran. While diplomatic efforts have reduced immediate concerns, uncertainty remains over whether the agreement can hold over the longer term.
The latest price weakness comes after a turbulent weekend that briefly raised questions about the durability of the week-old accord. Tensions escalated when U.S. President Donald Trump warned that military action could resume if Iran interfered with shipping through the Strait of Hormuz after Tehran declared the strategic waterway closed. Although fears have since eased, investors remain alert to the possibility of renewed geopolitical risks.
Analysts say skepticism continues to influence market behavior, as decades of strained relations between the United States and Iran have made investors cautious about assuming a lasting resolution. As a result, any return to oil prices seen before the conflict may take time, even if diplomatic progress continues.
Beyond geopolitical developments, traders are also focusing on supply data from the United States. A survey of market analysts expects U.S. crude oil inventories to have declined last week, along with gasoline and distillate fuel stockpiles. Falling inventories typically indicate stronger demand or tighter supply conditions and can provide support for oil prices.
Meanwhile, government figures released Monday showed that crude oil held in the U.S. Strategic Petroleum Reserve fell to 331.2 million barrels last week, its lowest level since June 1983. The decline highlights the pressure on energy supplies following the disruption caused by the U.S.-Iran conflict and underscores the importance of stable crude flows in maintaining market balance.
For now, improving tanker traffic through the Strait of Hormuz and signs of diplomatic progress are helping ease concerns about supply disruptions, keeping downward pressure on oil prices. Nevertheless, traders remain cautious as geopolitical risks and inventory trends continue to shape the outlook for global energy markets.