Oil steadied on Tuesday after suffering its sharpest one-day decline in more than two weeks, as traders weighed the prospects of a US-Iran agreement that could reopen the Strait of Hormuz and restore a key artery of global energy trade. Brent crude settled near $83 a barrel after dropping almost 5% in the previous session, while West Texas Intermediate (WTI) hovered above $81.
The decline has largely unwound the war-driven rally that pushed oil prices sharply higher during the months-long disruption in the Persian Gulf.
Markets are now focused on an interim agreement expected to be signed by Washington and Tehran in Switzerland later this week. While US President Donald Trump has expressed confidence that the Strait of Hormuz will reopen, traders remain cautious as neither side has yet released details of the proposed memorandum of understanding.
Speaking at the G7 summit in France, Trump said the strait would be “open and toll-free” by Friday. However, shipping companies, commodity traders and energy buyers are seeking greater clarity on operational rules and security arrangements before resuming normal traffic through the route.
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Before the conflict, roughly one-fifth of the world’s oil supply passed through the narrow waterway. Its effective closure over recent months disrupted crude, fuel and liquefied natural gas shipments, forcing countries to draw down commercial and strategic inventories.
Even if a deal is signed, analysts caution that oil flows may not immediately return to normal. Questions remain around maritime safety, insurance costs, vessel scheduling and the removal of restrictions that have hampered shipping activity.
According to shipping intelligence firm Kpler, nearly 300 cargo-laden vessels are currently waiting to leave the Persian Gulf, while a similar number of empty ships are queued to enter the region and load goods. The backlog highlights the logistical challenges that could persist even after a formal reopening.