West Texas Intermediate (WTI), the US crude oil benchmark, traded around $89.35 during early European hours on Tuesday, drifting lower as traders awaited progress on Middle East peace talks, particularly concerning the Iran conflict and the fragile US–Iran ceasefire struck in early April [1]. Iran's Tasnim news agency reported on Monday that Tehran's negotiating team had stopped exchanging messages with the US through mediators due to attacks on Lebanon [1][2]. US President Donald Trump responded by stating Washington would maintain its blockade on Iranian ports, adding, 'If they don’t want to talk, that’s OK with me' [1]. Trump also expressed optimism that an agreement to reopen the Strait of Hormuz and extend the ceasefire with Iran could be reached 'over the next week' [1]. Meanwhile, Israeli Prime Minister Benjamin Netanyahu emphasized continued operations against Hezbollah in Southern Lebanon [1][2].
According to MUFG’s Michael Wan, negotiations around the US-Iran conflict and developments in the Strait of Hormuz remain a key driver for global markets, with renewed military strikes over the weekend further straining the fragile ceasefire. The US conducted 'self-defence' strikes on Iranian radar and drone facilities, while Iran's IRGC targeted a US air base [2]. On Monday, Iran suspended negotiations via intermediaries, citing Israel's escalating offensive in Lebanon [2]. Wan noted that market recovery was aided by Trump's announcement that both Israel's Prime Minister Netanyahu and Hezbollah had agreed to stop shooting, although Netanyahu did not confirm this in such broad terms [2].
Brent crude experienced significant volatility, surging as much as approximately 6% intraday to near $97 per barrel before closing around 4% higher [2]. The uncertainty over a possible Iran-US peace deal and fears of a total closure of the Strait of Hormuz could lift oil prices, while hopes for US-Iran peace negotiations might weigh on prices [1]. The release of the American Petroleum Institute (API) report later on Tuesday is expected to impact WTI prices, with a larger-than-expected crude oil inventory draw indicating stronger demand and potentially lifting prices, while a bigger build could signal weaker demand or excess supply, weighing on prices [1].
Both sources highlight the fragile nature of the ceasefire and the ongoing negotiations as central to oil price movements, with military actions and diplomatic developments directly influencing market sentiment and volatility [1][2].
CONCLUSION
Oil prices remain highly sensitive to developments in the US-Iran conflict and Strait of Hormuz negotiations, with recent military actions and diplomatic setbacks fueling volatility. Brent crude saw a sharp spike and partial pullback, while WTI drifted lower amid cautious optimism for peace talks. The market is closely watching upcoming inventory data and further diplomatic announcements for direction.