Oil slips below $90 on fresh US-Iran ceasefire talks

Crude oil prices retreated on Tuesday after reports emerged that the United States and Iran were exploring a new ceasefire, easing fears of an immediate supply disruption despite continued military exchanges across the Gulf.

At the time of writing, Brent crude traded at $88.17 per barrel, down from $90 reached a day earlier, while West Texas Intermediate (WTI) fell to $81.88 per barrel.

The decline came as reports indicated that diplomats were seeking to broker a 10-day ceasefire between Washington and Tehran in an effort to revive negotiations that collapsed after renewed hostilities.

However, prospects for an agreement remain uncertain as neither side has signalled a willingness to make significant concessions.

Reuters, citing a senior Iranian official, reported that Tehran had received a ceasefire proposal intended to revive the June agreement with the United States, although Iranian authorities have not indicated whether they are prepared to accept the offer.

The market reaction suggests investors are cautiously pricing in the possibility of de-escalation after crude prices surged above $90 amid fears that the conflict could severely disrupt oil exports from the Middle East.

Despite the pullback, tensions across the region remain elevated.

Missile exchanges between the United States and Iran continued overnight, while US President Donald Trump warned that Iran would face further consequences following the deaths of several American troops.

Shipping through the Strait of Hormuz, the world’s most critical oil transit route, also remains severely constrained.

Industry reports earlier this week indicated that tanker traffic through the waterway has fallen to near standstill as commercial vessel operators avoid the area because of escalating security risks.

The disruption has heightened concerns over global crude supplies, given that the Strait of Hormuz handles roughly 20 percent of global oil consumption and a substantial share of the world’s liquefied natural gas exports.

Adding to market uncertainty, Yemen’s Houthi movement on Monday threatened to impose a naval blockade on Saudi Arabia, potentially targeting oil shipments through the Bab el-Mandeb Strait, another strategic maritime corridor linking the Red Sea to international markets.

Commodity analysts at ING said Saudi Arabia has increasingly relied on the Red Sea port of Yanbu to sustain crude exports.

According to the bank, Saudi crude exports through Yanbu reached 4.6 million barrels per day in June, up sharply from 1.3 million barrels per day at the beginning of the year, reflecting efforts to reduce dependence on the Strait of Hormuz.

ING analysts Warren Patterson and Ewa Manthey warned that any disruption at the Bab el-Mandeb Strait would force vessels to reroute around the Cape of Good Hope, increasing shipping times, freight costs and insurance premiums.

“If shippers decide to avoid the Bab el-Mandeb Strait, voyage times will be longer and more expensive,” the analysts said.

However, they noted that Tuesday’s decline in crude prices suggests traders remain unconvinced that the Houthis would be able to successfully enforce a blockade of the Red Sea shipping lane.