Oil prices rose modestly on Tuesday after posting sharp losses in the previous session, as concerns over the security of Middle East energy supplies persisted amid continued uncertainty over prospects for a diplomatic resolution to the conflict between the United States and Iran.
Brent crude futures for the front-month contract rose $0.62, or 0.7%, to $84.39 per barrel as of 0055 GMT, after falling 7% in the previous session to their lowest level in three weeks.
U.S. West Texas Intermediate (WTI) crude gained $0.61, or 0.7%, to $80.95 per barrel, recovering slightly after dropping more than 5% on Monday to its lowest level in nearly a week.
Prices had fallen after U.S. President Donald Trump announced on Sunday that he would postpone new military strikes on Iran while diplomatic efforts continue to end the conflict and resolve disputes over control of the Strait of Hormuz.
The strategic waterway links Gulf oil producers to global markets and, before the conflict began, carried energy exports equivalent to roughly 20% of global oil consumption each day.
However, Iranian Foreign Ministry spokesman Esmaeil Baghaei rejected Trump’s remarks on Monday, saying there are currently no negotiations with the United States and that no meetings have been scheduled.
Tim Waterer, Chief Market Analyst at KCM Trade, said pressure on oil prices has eased somewhat following Trump’s decision to suspend attacks on Iran and promote a return to negotiations.
“However, the bearish trend remains fragile,” Waterer said. “Oil prices could quickly move higher again if missile attacks resume or if oil tankers near the Strait of Hormuz come under fire once more.”
The Strait of Hormuz remains a major point of disagreement. Washington maintains that the memorandum of understanding reached in June required Iran to reopen the waterway, while Tehran argues the agreement explicitly preserved its authority over the strait.
Analysts at Barclays said average net exports of crude oil and refined products through the Strait of Hormuz reached 4.2 million barrels per day during the week ending July 31, compared with 3.2 million barrels per day the previous week.
In the Red Sea, vessel-tracking data showed on Monday that six large Saudi-flagged tankers changed course in the Gulf of Aden in recent days and headed toward South Africa after Yemen’s Iran-aligned Houthi movement threatened to target Saudi vessels. Meanwhile, two tankers carrying Saudi crude successfully transited the Bab al-Mandab Strait.
Shipping activity through the Strait of Hormuz between Iran and Oman has also slowed following reports of attacks on commercial vessels.
The waterway continues to pose security risks. On Tuesday, the UK Maritime Trade Operations (UKMTO) said it had received a report of an incident about 20 nautical miles (37 kilometers) northeast of Khasab, Oman, after a merchant vessel reported via maritime radio that it had been struck by an unidentified projectile.
Waterer said that although the conflict between Saudi Arabia and the Houthis has not completely disrupted energy flows, it has extended shipping times, increased insurance costs, and forced some vessels to reroute.
“Combined with the Strait of Hormuz crisis, the market continues to face a dual geopolitical risk that is preventing oil from fully shedding its geopolitical risk premium,” he added.
Source: Reuters
