Global oil prices found some footing on Tuesday morning after a volatile start to the week rattled energy markets. Brent crude closed just under $100 on Monday after a steep double-digit fall, while US benchmark West Texas Intermediate hovered near the $90-per-barrel mark for June contracts.
The pause follows a dramatic trading session that saw prices tumble as geopolitical signals swung rapidly, leaving traders struggling to price in risk. Despite the pullback, crude remains significantly elevated, with prices still up more than 30% this month.
Conflicting Signals From Washington And Tehran
At the heart of the volatility is a confusing mix of diplomacy and denial. US President Donald Trump said Washington would hold off on targeting Iran's energy infrastructure for five days, suggesting backchannel talks were underway to ease tensions.
Tehran, however, swiftly rejected claims of negotiations. At the same time, Israel continued military strikes, adding another layer of uncertainty to an already fragile situation.
Trump also struck an optimistic tone on oil, saying prices could “fall like a rock” if a deal is reached. But markets appear unconvinced, given the lack of clarity on whether any real progress has been made.
Strait Of Hormuz Remains The Pressure Point
The Strait of Hormuz continues to dominate market sentiment. The critical oil transit route has seen severely disrupted traffic, with only a handful of vessels managing to pass through in recent days. This has forced Gulf producers to cut back millions of barrels in daily output, tightening global supply.
While there are early signs of limited movement—such as a supertanker carrying Iraqi crude exiting the Gulf—most shipping activity remains stalled.
Analysts caution that rhetoric alone won't stabilise markets. As RBC Capital Markets noted, the real test will be whether shipping flows normalise, not political statements.
The ongoing conflict has triggered historic swings in oil prices, with four of the six biggest moves in Brent futures occurring just this month. Constant shifts in messaging, particularly from the US, have left investors fatigued and trading volumes thinner.
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