Oil prices rebounded by over 1 percent on Tuesday after tumbling in the previous session, as renewed concerns over potential supply disruptions in the Middle East outweighed the earlier selloff. Investors remained cautious that a diplomatic breakthrough in the U.S.-Iran conflict, which has disrupted oil shipments, was still unlikely.
As of 5:17 GMT, Brent crude futures climbed $1.23, or 1.47 percent, to $85 a barrel, recovering some losses after slumping 7 percent on Monday to their lowest level in three weeks. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures gained 90 cents, or 1.12 percent, to $81.24 a barrel after dropping more than 5 percent in the previous session, when prices fell to their lowest level in nearly a week.
Strait of Hormuz dispute continues to impact oil shipments
Oil prices came under pressure after U.S. President Donald Trump said on Sunday that he was delaying further military action against Iran to allow ongoing efforts to end the conflict and resolve disputes over control of the strategically important Strait of Hormuz.
The waterway, a vital route linking Gulf oil producers with global markets, handled around one-fifth of global crude oil and natural gas shipments before the conflict began.
However, Iran dismissed the prospect of diplomacy on Monday, with Foreign Ministry spokesman Esmail Baghaei rejecting Trump’s assertion that talks were underway, stating that no negotiations with the United States were taking place and no meetings had been scheduled.
The dispute over the Strait of Hormuz remains a major obstacle in negotiations. Washington argues that a memorandum of understanding reached in June requires Iran to reopen the strategic waterway, while Tehran maintains the agreement explicitly preserves its authority over the strait.
Analysts at Barclays said net exports of crude oil and refined products through the Strait of Hormuz averaged 4.2 million barrels per day in the week ended July 31, up from 3.2 million barrels per day the previous week.
U.S. crude oil exports fall to 3.66 million bpd in July
Elsewhere, shipping patterns in the region continued to reflect heightened caution. Data showed that six Saudi-flagged supertankers recently rerouted through the Gulf of Aden toward southern Africa, while two tankers carrying Saudi crude transited the Bab el-Mandeb Strait. Despite these adjustments, overall traffic through the Bab el-Mandeb and the Strait of Hormuz remained largely stable at the start of the week.
However, security risks persist. On Tuesday, the United Kingdom Maritime Trade Operations (UKMTO) agency reported an incident about 20 nautical miles northeast of Oman’s Al Khasab after a cargo vessel broadcast over VHF Channel 16 that it had been struck by an unidentified projectile.
Oil prices also rose as U.S. crude oil exports fell to 3.66 million barrels per day in July, their lowest level in eight months, according to ship-tracking data. The decline followed a brief ceasefire between the United States and Iran in June, which temporarily boosted Middle Eastern oil supplies and reduced overseas demand for U.S. crude.
Source: economymiddleeast