Oil Prices Slide Below $85 as Supply Risk Eases
Oil prices fell for a second straight day on Tuesday as signs of easing tensions between the US and Iran prompted investors to scale back fears of a major disruption to Middle East oil supplies.
International benchmark Brent crude futures for October traded at $83.95 per barrel, down 2.24% from the previous close of $85.87.
US benchmark West Texas Intermediate (WTI) futures for September fell 2.17% to $80.82 per barrel, compared with $82.61 in the previous session.
The market has steadily given back last week’s sharp gains, when Brent briefly climbed above $100 a barrel, its highest level in nearly two months, on fears that the conflict could disrupt oil flows through the Strait of Hormuz and the Bab el-Mandeb Strait.
US President Donald Trump said on Monday that there is a “good chance” of reaching a deal with Iran, but warned that Washington would resume military operations if negotiations fail.
“They want to meet, and we are meeting. We’ll see what happens. There is a chance we can make a deal,” Trump told reporters.
“We’re talking with Iran right now,” he said. “We are having good talks. So, we’ll see what happens. There is a good chance something can happen.”
However, prices found some support from ongoing security risks around key shipping lanes.
Despite the pause in US-Iran hostilities, uncertainty persists over traffic through the Strait of Hormuz, while threats by Iran-backed Houthi forces against Saudi shipping continue to fuel concerns over the Bab el-Mandeb Strait.
According to S&P Global’s CAS Gulf Hormuz Update released Monday, vessel traffic through the Bab el-Mandeb Strait has fallen sharply in recent days as shipowners continue to reassess the risks of operating in the Red Sea.
Traffic through the Strait of Hormuz also remains well below normal levels despite the pause in hostilities.
The report said some operators are avoiding Saudi Red Sea ports altogether, while others are rerouting vessels around the Cape of Good Hope, underscoring that security concerns continue to affect global shipping even as diplomatic efforts gain momentum.
Meanwhile, Iranian Foreign Minister Abbas Araghchi called Monday for closer regional cooperation to restore stability in the Strait of Hormuz, blaming what he described as “US aggression” for tensions in the strategic waterway.
Araghchi made the remarks during separate phone calls with Omani Foreign Minister Badr Albusaidi and Saudi Foreign Minister Prince Faisal bin Farhan, Iran’s state broadcaster IRIB reported Tuesday.
Araghchi stressed the need to strengthen regional cooperation and intensify joint diplomatic efforts to promote stability across the region and “eliminate the state of instability in the Strait of Hormuz resulting from the aggressive actions of the United States.”
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