Oil Prices Rebound After Sharp Fall As US-Iran Tensions Keep Supply Risks Alive

Oil prices moved higher on Tuesday after suffering a sharp sell-off in the previous session, as investors continued to monitor the impact of the ongoing US-Iran conflict on global crude supplies.

Despite renewed diplomatic efforts, concerns over potential disruptions in key Middle East shipping routes kept markets cautious.

Brent crude rose 1.6% to over $85 per barrel after plunging nearly 7% on Monday to a three-week low. US West Texas Intermediate (WTI) crude also gained 1.16% to over $81 per barrel after declining more than 5% in the previous session.

The rebound came after US President Donald Trump said on Sunday that further military action against Iran would be delayed as diplomatic channels remained open.

The development had triggered Monday’s sharp fall in oil prices, as traders hoped for a possible resolution to the conflict and reduced risks to crude shipments.

However, uncertainty persisted after Iran rejected Trump’s comments. Iranian Foreign Ministry spokesperson Esmail Baghaei said Tehran was not engaged in negotiations with Washington and that no meetings had been scheduled.

The Strait of Hormuz remains at the centre of the dispute, as the key waterway handles a significant share of global oil shipments. The US has argued that a previous agreement required Iran to reopen the route, while Tehran maintains that it retains authority over the strategic passage.

Shipping activity in the region has also remained disrupted. Several Saudi-flagged supertankers recently changed routes in the Gulf of Aden and moved towards southern Africa, while some vessels continued passing through the Bab el-Mandeb Strait.

Meanwhile, traffic through the Strait of Hormuz has slowed following reports of attacks on commercial vessels. The United Kingdom Maritime Trade Operations (UKMTO) said it received a report of an incident near Oman’s Al Khasab, where a cargo ship reported being hit by an unidentified projectile.

Analysts said oil markets are likely to remain volatile as traders balance hopes of diplomatic progress against the possibility of further military escalation and supply disruptions from one of the world’s most important energy regions.