Oil prices edged lower in early Tuesday trading as markets pinned cautious hopes on a revival of US-Iran diplomacy, even as tensions around the Strait of Hormuz underscored the fragility of the situation ahead of the expiry of a two-week ceasefire.
Vice President JD Vance and top US officials are expected to depart Tuesday for Pakistan ahead of a potential second round of talks, said CNN quoting sources.
US President Donald Trump struck a cautiously optimistic tone, saying late Monday that Washington was “open to serious talks” but warned that “any threat to global shipping will be met with decisive action.”
He said the ceasefire will end on Wednesday evening and is unlikely to be extended. However, Iran’s Foreign Ministry earlier insisted there were no negotiations.
Brent crude futures slipped 48 cents to around $95 a barrel at 03:45 GMT, while US West Texas Intermediate (WTI) fell 75 cents to $86.67, paring some of the sharp gains recorded a day earlier.
Prices had surged in the previous session after Iran again moved to shut the Strait of Hormuz — a critical artery for roughly a fifth of global oil flows — following the seizure of an Iranian cargo vessel by the United States, part of an escalating blockade that has rattled global energy markets.
Market participants are now closely watching whether talks between United States and Iran can resume before the ceasefire lapses later this week, a development analysts say could determine near-term price direction.
“Any signal that negotiations are back on track is tempering risk premiums, but the market remains highly sensitive to disruptions in Hormuz,” said a Singapore-based commodities strategist. “Even a partial closure sends shockwaves through supply chains.”
Iran, meanwhile, has linked the reopening of the waterway to the lifting of what it calls “illegal maritime interference,” raising doubts over how quickly normal flows can resume.
Energy analysts note that the geopolitical risk premium remains firmly embedded in oil prices. “We are seeing a tug-of-war between diplomatic optimism and physical supply risk,” said an analyst at a leading global bank. “Until there is clarity on the Strait and the ceasefire extension, volatility will persist.”
In a Truth Social post, Trump said: "I’m winning a War, BY A LOT, things are going very well, our Military has been amazing."
Attacking media that are critical of his actions, Trump wrote: "If you read the Fake News, like The Failing New York Times, the absolutely horrendous and disgusting Wall Street Journal, or the now almost defunct, fortunately, Washington Post, you would actually think we are losing the War. The enemy is confused, because they get these same Media “reports,” and yet they realize their Navy has been completely wiped out, their Air Force has gone onto darker runways, they have no Anti Missile or Anti Airplane Equipment, their former leaders are mostly gone (This has been, in addition to everything else, Regime Change!), and perhaps, most important of all, THE BLOCKADE, which we will not take off until there is a “DEAL,” is absolutely destroying Iran.
"They are losing $500 Million Dollars a day, an unsustainable number, even in the short run. The Anti-America Fake News Media is rooting for Iran to win, but it’s not going to happen, because I’m in charge! Just like these unpatriotic people used every ounce of their limited strength to fight me in the Election, they continue to do so with Iran. The result will be the same — It already is!"