Crude rebounds after sharp selloff, but markets remain cautious over sanctions waiver and fragile shipping recovery
Oil prices recovered modestly on Tuesday after a steep drop in the previous session, as traders reassessed optimism around US-Iran peace talks and waited for clearer signs that crude flows through the Strait of Hormuz were stabilising.
Brent crude futures rose 24 cents, or 0.38 percent, to $78.15 a barrel, while US West Texas Intermediate gained 33 cents, or 0.46 percent, to trade at $74.19 a barrel in early dealings.
The rebound followed a sharp selloff on Monday, when prices fell more than 3 percent after Washington granted Iran a 60-day sanctions waiver following initial peace talks. Reports of a pause in hostilities in Lebanon under the broader US-Iran understanding also added to expectations that regional tensions might ease.
Markets stay cautious despite early diplomatic movement
Even so, analysts said investors remain unconvinced that the diplomatic progress will quickly translate into lower geopolitical risk or a full return to pre-war oil market conditions.
Market sentiment had improved after the United States and Iran outlined a roadmap for further talks, but traders have since shifted to a more cautious stance as they await concrete proof that the agreement will hold and that shipping through the Strait of Hormuz will normalise.
US President Donald Trump added to the uncertainty on Monday by saying Iran would agree to weapons inspections to ensure what he called “nuclear honesty.” He also warned that if Tehran failed to honour its commitments, Washington would respond.
Hormuz traffic and low US reserves keep traders on edge
Ship-tracking data showed that two crude tankers carrying just under two million barrels of oil passed through the Strait of Hormuz on Monday, suggesting that traffic may be gradually picking up after weaker flows over the weekend.
However, investors remain sensitive to any disruption in the strategic waterway, which remains central to global oil supply.
Separately, the US Department of Energy reported that crude held in the Strategic Petroleum Reserve fell to 331.2 million barrels last week, the lowest level since June 1983, highlighting tighter supply conditions in the wake of the recent US-Iran conflict.
