- Oil prices steadied after a sharp two-day rally amid Middle East geopolitical risks and diplomacy
- Brent crude traded below $89 a barrel, WTI hovered near $83 following recent gains of nearly 6%
- US-Iran military exchanges continue, with Iran retaliating attacks on Kuwait and threats in the Red Sea
Oil prices steadied on Tuesday after a sharp two-day rally, as traders balanced mounting geopolitical risks in the Middle East against renewed diplomatic efforts to de-escalate the conflict between the US and Iran.
Brent crude traded below $89 a barrel, while US benchmark West Texas Intermediate hovered near $83, after both contracts gained nearly 6% over the previous two sessions.
The latest bout of volatility comes as the US and Iran continue to exchange military strikes. President Donald Trump has vowed that Tehran "will pay" following the killing of American soldiers, while Iran has retaliated with attacks on Kuwait, raising fears that the conflict could spread across the region.
Adding to supply concerns, Yemen's Iran-backed Houthi militants threatened to block Saudi Arabia's maritime traffic in the Red Sea. The move could jeopardise a key export route that allows the kingdom to ship millions of barrels of crude through a pipeline that bypasses the Strait of Hormuz, one of the world's busiest oil chokepoints.
ALSO READ: Iran-Allied Houthis Announce 'Sea Navigation Ban' On Saudi Arabia
The situation in Hormuz has also deteriorated. Maritime traffic through the strait slowed sharply after Iranian attacks on commercial vessels over the weekend. Tanker operator Dynacom Tankers said two of its vessels—a supertanker and a smaller fuel tanker—were struck in the waterway. Separately, UK Maritime Trade Operations reported another tanker had been hit by an unidentified projectile northeast of Oman, though it remains unclear whether the incident is linked.
The heightened risks have prompted shipowners to offer hefty incentives to crews willing to sail through the region. According to Bloomberg, Sinokor Group, one of the world's largest supertanker owners, is offering seafarers an additional six months' salary for completing a return voyage through Hormuz.
Despite the growing security risks, oil prices have not extended their rally as markets continue to watch diplomatic developments closely. Iran has said mediators are exploring proposals to ease hostilities, while Reuters reported discussions around a possible 10-day ceasefire.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
