BY COMFORT OGBONNA
Oil prices climbed about 1% on Tuesday after a steep decline in the previous session, as investors remained concerned that Middle East supply disruptions could continue amid uncertainty over diplomatic efforts to resolve the conflict between the United States and Iran.
Brent crude futures rose $1.12, or 1.3%, to $84.89 a barrel by 0355 GMT after falling 7% on Monday to their lowest level in three weeks. U.S. West Texas Intermediate (WTI) crude gained 77 cents, or 1%, to $81.11 a barrel after dropping more than 5% in the previous session to its weakest level in nearly a week.
The recent sell-off followed comments from U.S. President Donald Trump that he was delaying further military action against Iran while discussions continued over ending the conflict and addressing disputes involving the Strait of Hormuz, one of the world’s most important energy shipping routes.
The waterway connects major Gulf oil producers with global markets and previously handled roughly one-fifth of worldwide crude oil and natural gas shipments before the conflict intensified.
However, uncertainty increased after Iran rejected claims that negotiations with Washington were underway. Iranian Foreign Ministry spokesman Esmail Baghaei said no talks were taking place and that no meetings had been scheduled.
Analysts said the sharp decline in oil prices may have been excessive given the unresolved geopolitical risks.
“The scale of the sell-off seems fairly overdone, given that there’s still considerable uncertainty,” analysts said, noting that previous attempts at diplomatic progress in the region have often failed to produce lasting agreements.
The future of the Strait of Hormuz remains a major point of disagreement between the two sides. Washington has said a previous agreement required Iran to reopen the waterway, while Tehran maintains that the agreement preserved its authority over the strategic passage.
Market data showed that crude oil and refined product exports through the Strait of Hormuz increased recently, averaging about 4.2 million barrels per day in the week ending July 31, compared with 3.2 million barrels per day the previous week.
Shipping activity in other key waterways has also been closely monitored. In the Red Sea region, several Saudi-flagged supertankers recently changed course in the Gulf of Aden toward southern Africa, while other vessels carrying Saudi crude continued through the Bab el-Mandeb Strait.
Despite the increase in shipping activity, security concerns remain. The United Kingdom Maritime Trade Operations agency reported an incident Tuesday involving a cargo vessel approximately 20 nautical miles northeast of Oman’s Al Khasab after the ship reported being struck by an unknown projectile.
Analysts said ongoing security risks in major energy shipping routes continue to support a risk premium in oil prices. Although fighting in surrounding regions has not completely disrupted energy flows, it has contributed to longer shipping routes, higher insurance costs, and occasional vessel diversions.
“With the Strait of Hormuz, it keeps a dual-chokepoint risk in the market that prevents oil from fully unwinding its geopolitical premium,” said Tim Waterer, chief market analyst at KCM Trade.
Investors are expected to continue monitoring developments in U.S.-Iran relations, shipping activity through major waterways, and any signs of further disruptions to global energy supplies as they assess the direction of oil prices.
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