Why Oil Prices Declined 1% Despite Easing Middle East Tensions

SINGAPORE — Oil prices fell more than 1 percent on Tuesday, extending losses from the previous session, as signs of progress in restoring crude flows through the Strait of Hormuz emerged following US‑Iran peace talks.

Brent crude futures dropped $1.09, or 1.4 percent, to $76.81 a barrel, while US West Texas Intermediate declined 87 cents, or 1.2 percent, to $72.99 a barrel.

Prices fell more than 3 percent on Monday after the United States granted Iran a 60‑day sanctions waiver following initial peace talks, and as officials reported a lull in hostilities in Lebanon under the broader agreement. Two crude tankers carrying just under 2 million barrels of oil sailed through the Strait of Hormuz on Monday, ship‑tracking data showed, indicating traffic was picking up after weaker flows on Sunday due to concerns over passage.

“The gradual increase in oil flows through the Strait of Hormuz continues to weigh on the market,” ING analysts said in a note. Sparta Commodities’ head of research Neil Crosby noted that transits over recent days “look to have risen sharply,” which the market will treat as a proxy for both physical oil and diplomatic progress.

The price declines came after a weekend that had appeared to put the week‑old accord in jeopardy, including threats from President Donald Trump to restart the war if Iran disrupted shipping. “There remains a prevailing dose of market skepticism, rooted in deep‑seated mistrust between Washington and Tehran,” said Tim Waterer, chief market analyst at KCM Trade.

Separately, US crude stocks in the Strategic Petroleum Reserve fell to 331.2 million barrels last week, the lowest since June 1983, as supplies tightened amid the conflict.

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