Oil prices steadied on Tuesday after posting their biggest daily gain in about a month, as conflicting signals around US-Iran negotiations kept traders focused on the risk of prolonged disruption to Middle Eastern energy supplies. Brent crude settled just below $95 a barrel, while West Texas Intermediate traded near $92 a barrel after surging more than 5% in the previous session.
The rally was initially triggered by reports that Tehran had suspended talks with Washington in protest against Israel's military actions in Lebanon. Prices later pared some gains after US President Donald Trump said negotiations with Iran were still ongoing.
At the heart of the market's anxiety is the future of the Strait of Hormuz, the key shipping route that carries a substantial share of global crude exports. Trump said in an interview with ABC News that a memorandum of understanding with Iran to reopen the strait could be reached within the next week, although “a few more points” still needed to be resolved.
The lack of clarity around the extension of the current ceasefire has created sharp swings in oil prices over recent weeks. Crude had fallen last month on expectations that a diplomatic breakthrough could eventually restore normal energy flows through the Persian Gulf.
However, uncertainty returned after Iran's semi-official Tasnim news agency reported that Tehran and its regional allies were considering the complete closure of both the Strait of Hormuz and the Bab el-Mandeb Strait, another strategically important route for oil shipments.
The geopolitical backdrop became more complicated after fresh tensions emerged between Israel and Hezbollah in Lebanon.
Trump and Israeli Prime Minister Benjamin Netanyahu reportedly gave differing accounts of a recent conversation about the conflict, adding to uncertainty over whether the fighting could escalate further. Meanwhile, Lebanon's presidency said negotiations would continue through the week to expand a US-brokered ceasefire beyond southern Lebanon to cover the entire country.
In a post on Truth Social, President Donald Trump said he spoke with Israeli Prime Minister Benjamin Netanyahu and urged him not to proceed with a major military operation in Beirut, Lebanon. According to Trump, Netanyahu subsequently ordered Israeli forces to pull back.
Trump also said he held discussions with representatives linked to Hezbollah's leadership, claiming they agreed to halt attacks on Israel and its troops. He added that Israel had likewise agreed to cease fire against Hezbollah. "Let's see how long that lasts," Trump wrote, expressing hope that the cessation of hostilities would endure permanently.
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