Brent crude rebounded above $100 per barrel on Tuesday amid persistent Middle East tensions, reversing a steep 11% drop from the previous day following conflicting diplomatic announcements.
Price Rebound After Sharp Decline
Oil prices recovered in Asian trading after Monday's sell-off, reflecting ongoing market volatility.
- Brent crude futures for May rose over 3% to $102.96 per barrel.
- West Texas Intermediate futures for May jumped 3.6% to $91.27 per barrel.
- Monday's decline saw Brent fall about 11% to around $99 per barrel after peaking above $112 on Friday.
Diplomatic Claims and Iranian Denial
President Donald Trump stated on Truth Social that the U.S. and Iran held productive conversations and ordered a five-day postponement of military strikes against Iranian energy infrastructure. This initially lowered oil prices and boosted equities. However, Iran immediately denied any negotiations, fueling market skepticism.
- José Torres, senior economist at Interactive Brokers, noted: "Despite the exuberance on Wall Street, oil is well off its lows after Tehran denied conducting any weekend negotiations with Washington."
- The risk of prolonged conflict remains a key concern for traders.
Infrastructure Risks and Supply Disruptions
Repeated attacks on Middle Eastern energy infrastructure heighten fears of production and transportation disruptions.
- Torres warned that even with a potential deal, nervousness over capacity and transport issues could sustain higher oil costs compared to early 2025 levels.
- The Strait of Hormuz, a critical chokepoint handling about 20% of global seaborne oil supplies before the war, has been constrained by Iranian actions.
- Iranian state media confirmed that Tehran would allow safe transit through the strait except for vessels linked to its "enemies," maintaining supply uncertainties.