Oil prices edged higher on Tuesday, recovering from their first decline in nearly a week, as traders recalibrated expectations around supply disruptions stemming from the ongoing Iran conflict. Brent crude climbed back towards the $102-per-barrel mark, while US benchmark West Texas Intermediate hovered near $95.
The rebound follows a sharp sell-off in the previous session, when prices dropped nearly 3% on signs that some oil shipments were still managing to pass through the Strait of Hormuz - a critical artery for global energy trade that has been under severe strain since hostilities escalated late last month.
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Supply Risks Intensify in the Middle East
Investor concerns remain firmly anchored in the Middle East, where Iran has escalated attacks on energy infrastructure. A recent drone strike targeting a major gas field in the United Arab Emirates has heightened fears of broader disruptions across the region's energy network.
At the same time, the United States has signaled a tougher stance. President Donald Trump has warned of potential strikes on Iranian oil facilities, while also claiming that Washington is actively weakening Tehran's ability to disrupt commercial shipping through Hormuz.
Get all the updates on the ongoing US, Israel-Iran war here.
Despite the tensions, US officials have indicated that Iran continues to export crude through the strait, offering some relief to markets. Additional supply-side support is expected from the US government's planned release of emergency crude reserves, alongside signals from the International Energy Agency that further stockpile drawdowns remain on the table.
Producers Scramble, Volatility Surges
Regional producers are already adjusting. The UAE and Kuwait have cut output further, while Saudi Arabia and the UAE are working to reroute exports through alternative channels that bypass Hormuz altogether.
The result is a market gripped by extreme volatility. Price swings have widened significantly, with recent trading sessions reflecting some of the most turbulent conditions on record for Brent crude. The International Energy Agency has described the disruption as potentially the largest in the history of global oil markets.
Amid the turbulence, there are tentative signs of diplomatic movement. Reports suggest that a direct communication channel between the US and Iran has been re-established, raising the possibility - however slim - of de-escalation.
ALSO READ: Trump Calls Iran Paper Tiger, Says Countries Dependent On Strait of Hormuz Must Help US
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