Oil prices edged lower on Tuesday following a strong rally in the previous session, as markets balanced rising geopolitical risks in the Gulf with U.S. attempts to keep shipping routes open through the Strait of Hormuz.
By 05:21 ET (09:21 GMT), Brent crude was down 1.1% at $113.16 per barrel, while U.S. West Texas Intermediate crude fell 1.9% to $104.37 per barrel.
Gains Driven by Escalating Conflict
In the prior session, Brent had surged more than 4%, with WTI climbing higher, as intensifying clashes between the United States and Iran—targeting both energy infrastructure and vessels navigating the Strait—pushed prices higher.
There are emerging indications that Iran’s control over the waterway may be easing. Shipping group A.P. Moller-Maersk A/S noted that a U.S.-flagged vehicle carrier operated by one of its subsidiaries successfully exited the Gulf through the strait with American military support.
Fragile Sentiment Amid Renewed Clashes
Despite this, market sentiment remains fragile after fresh military exchanges on Monday, with U.S. and Iranian forces launching new attacks in the Gulf as both sides attempted to assert dominance over the strategic route.
The escalation has unsettled an already fragile ceasefire and raised concerns about prolonged disruptions to global oil supply. Tensions intensified further after reported Iranian strikes on infrastructure in the United Arab Emirates, including an oil terminal in Fujairah.
“A re-escalation of tensions in the Persian Gulf pushed oil and gas prices higher as the market once again reprices the duration of supply disruptions from the region,” ING analysts said in a note.
Diplomatic Efforts and U.S. Intervention
Iranian Foreign Minister Abbas Araghchi said on Monday that military action alone would not resolve the crisis in the Strait of Hormuz, though he indicated that diplomatic discussions in Pakistan were making progress.
U.S. President Donald Trump recently unveiled an initiative called “Project Freedom,” aimed at helping vessels stranded in the Gulf through the use of military support.
The plan seeks to guide commercial shipping along safer routes and partially restore flows through the Strait of Hormuz, a passage that carries around one-fifth of global crude supply. Oil prices have climbed sharply since the conflict began in February, raising concerns about inflation worldwide.
“Any relief from stranded vessels making their way through the Strait will be temporary, with very few inbound vessels moving into the Persian Gulf,” ING analysts wrote.