Oil prices steadied on Tuesday after suffering their biggest one-day decline in a week, as investors shifted their attention from escalating geopolitical tensions to the possibility of renewed diplomacy between the US and Iran.
Brent crude traded near $84 a barrel after tumbling almost 5% in the previous session, while West Texas Intermediate hovered around $81, with traders closely monitoring developments around the Strait of Hormuz—a critical chokepoint for global energy supplies.
The latest move followed comments from US President Donald Trump, who said his administration had made what he described as a "last chance" offer to Iran and expressed confidence that the Strait of Hormuz could soon reopen fully.
"We're talking about the strait... having it open literally by tomorrow," Trump told reporters at the White House, while warning that Tehran faced one final opportunity to reach an agreement before tougher action.
Iran, however, denied direct negotiations with Washington, although officials said discussions with Oman aimed at improving shipping through the Strait of Hormuz were progressing. Tehran reiterated that any diplomatic breakthrough would require the US to change its approach first.
The oil market has remained highly volatile in recent weeks after the collapse of a temporary ceasefire between the US and Iran reignited hostilities across the Middle East. Concerns over disruptions to shipping through Hormuz—which previously handled around 20% of global crude oil and LNG flows—have repeatedly pushed prices higher.
While vessel traffic through the strait remains well below normal levels, there were signs that Saudi Arabia was adapting to the disruptions. Activity at the kingdom's Red Sea export hub of Yanbu picked up, suggesting producers are increasingly relying on alternative export routes as threats persist in the Persian Gulf and the Bab el-Mandeb chokepoint.
Beyond the Middle East, traders are also monitoring risks to Russian and Kazakh crude supplies. Attacks on energy infrastructure around the Black Sea and Russia's oil export network continued through July, raising concerns over additional supply disruptions even as some loadings resumed at the Caspian Pipeline Consortium terminal.
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