Oil prices recovered on Tuesday after suffering their steepest one-day decline in weeks, as persistent concerns over potential supply disruptions in the Middle East outweighed optimism that diplomatic efforts could quickly end the five-month-old conflict between the United States and Iran.
Brent crude futures rose 1.48% to $85.01 a barrel, rebounding after plunging 7% in the previous session to a three-week low. U.S. West Texas Intermediate (WTI) crude gained 1.06% to $81.19 a barrel after falling more than 5% on Monday to its lowest close in nearly a week.
The modest recovery came as traders reassessed geopolitical risks after a commercial vessel reported being struck by an unidentified projectile in the Strait of Hormuz, while six Saudi-operated oil tankers continued to avoid the Red Sea by sailing around Africa following threats from Yemen's Iran-backed Houthi movement. The disruptions have raised concerns over higher shipping costs, longer transit times and potential delays to global crude supplies.
Market sentiment also remained clouded by conflicting signals over diplomatic efforts to end the conflict. U.S. President Donald Trump said negotiations with Iran were under way and described them as Tehran's "last chance" to reach an agreement, while Iranian officials denied that any talks were taking place, adding to uncertainty over the prospects for a breakthrough.
Analysts said the sharp sell-off on Monday reflected expectations that an immediate escalation in the conflict had been averted after Washington signalled a preference for diplomacy over military action. However, the latest attack on commercial shipping and continuing threats to key maritime routes highlighted the fragility of the security situation in the Gulf, limiting the scope for further declines in oil prices.
Brent's previous-session decline also reflected technical factors, with the October contract becoming the front-month benchmark after the more expensive September contract expired at the end of last week, said a Reuters report. The October Brent contract closed about 4.7% below Friday's settlement for the expiring September contract, contributing to the sharp headline drop.
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