Oil prices fell for a third straight session on Tuesday, with Brent crude slipping toward $86 a barrel, as hopes that diplomacy between the United States and Iran could prevent a renewed escalation in the Middle East eased concerns over disruptions to global crude supplies.
Brent crude futures traded around $85.83 per barrel by mid-session, down 2.9%, while U.S. West Texas Intermediate (WTI) crude fell 2.4% to $80.63, with both benchmarks touching their lowest levels in more than a week.
The latest decline followed comments by U.S. President Donald Trump that Washington was engaged in “good talks” with Tehran after suspending military strikes against Iran to allow negotiations another chance. Trump said military action remained an option if diplomacy failed, but investors interpreted the remarks as reducing the immediate risk of a wider regional conflict.
The United States quietly halted attacks on Iran late last week after nearly two weeks of fighting, while Tehran also stopped retaliatory strikes on U.S. bases in neighboring countries. Iranian and Omani negotiators have since resumed discussions aimed at restoring safer navigation through the Strait of Hormuz, one of the world’s most important oil shipping routes.
Although tanker traffic through the strait remains below normal, the prospect of improved shipping has encouraged traders to remove some of the geopolitical risk premium that had pushed Brent above $90 earlier this month. Analysts say a fuller recovery in vessel movements could place additional downward pressure on prices.
Supply conditions also improved after exports resumed through the Caspian Pipeline Consortium (CPC) terminal on Russia’s Black Sea coast, a key outlet for Kazakh crude that had recently been disrupted by Ukrainian drone attacks. The resumption added to expectations of better near-term crude availability.
However, risks to global energy supplies have not disappeared.
Saudi Arabia said it intercepted drones allegedly launched by Iran-backed groups, while Yemen’s Houthi rebels claimed responsibility for attacks on the kingdom’s East-West oil pipeline. Shipping through the Red Sea also remains vulnerable despite signs of improvement in traffic through the Bab el-Mandeb Strait.
Analysts at Goldman Sachs said continued disruptions in the Gulf and Red Sea could still tighten global supplies if tensions escalate again, but noted that Brent could retreat toward $80 per barrel by the end of the year if diplomatic efforts continue to reduce geopolitical risks.
