West Texas Intermediate (WTI), the US crude oil benchmark, fell to a three-month low, trading around $79.20 during early European hours on Tuesday, following optimism surrounding a US-Iran framework deal aimed at ending the war [1]. The decline in WTI prices was driven by the easing of concerns over oil supply disruptions, as US President Donald Trump and Vice President JD Vance signed an electronic memorandum of understanding with Iran [1]. Trump stated that the Strait of Hormuz, a critical waterway for global oil shipments, is 'already partially opened' and is expected to be 'completely opened' by Friday [1].
The Strait of Hormuz had been effectively closed since the US and Israel launched airstrikes on Iran on February 28, resulting in the shutdown of approximately 14 million barrels per day (bpd) of oil production, which accounts for about one-fifth of global oil shipments [1]. While the agreement has improved market sentiment, uncertainty remains as both sides have differing accounts on key issues [1]. Iranian President Masoud Pezeshkian described the pact as an 'important step' toward stopping the fighting but cautioned that a final agreement for a lasting truce 'has yet to take shape' [1].
Market participants remain cautious due to ongoing uncertainties regarding the deal's details, shipping risks, mine clearance, and the time required to restore disrupted production [1]. Antreas Themistokleous, trading content specialist at Exness, noted that the deal initiates a 60-day negotiation period over Iran's nuclear program, with President Trump warning that military action could resume if no broader agreement is reached [1].
Traders are also awaiting the American Petroleum Institute (API) weekly crude oil report, which is due later on Tuesday. The report's outcome could further influence WTI prices: a larger-than-expected crude oil inventory draw would indicate stronger demand and potentially lift prices, while a bigger build could signal weaker demand or excess supply, putting additional pressure on WTI [1].
CONCLUSION
WTI crude oil prices have slumped to a three-month low amid optimism over a US-Iran peace framework, which has eased supply concerns but left traders cautious due to unresolved details and risks. The market remains sensitive to further developments in the US-Iran negotiations and upcoming inventory data, which could drive additional price volatility.