Oil prices fell sharply for a second consecutive session on Tuesday, with both Brent crude and West Texas Intermediate (WTI) closing at three-month lows as additional details emerged regarding a preliminary agreement between the United States and Iran to end the conflict and restore shipping through the Strait of Hormuz.
Brent crude settled at $78.96 per barrel, down $4.21 or 5.1%, while WTI crude settled at $76.05 per barrel, down $4.70 or 5.8%. The declines extended Monday’s losses and pushed both benchmarks to their lowest closing levels since early March.
Market sentiment remained heavily influenced by expectations that oil supplies disrupted during the conflict could gradually return to global markets. Reports indicated the proposed agreement would extend the existing ceasefire, reopen the Strait of Hormuz, and permit Iran to resume oil exports. Prior to the conflict, approximately 20% of global oil supplies transited the strait, making its reopening a significant development for energy markets.
Despite the optimism, analysts cautioned that several key issues remain unresolved, including sanctions, compensation arrangements, and the long-term status of Iran’s nuclear program. Industry experts also noted that restoring normal shipping patterns and energy exports could take weeks or months, even after a formal agreement is implemented.
The prospect of increased global oil supplies prompted several major financial institutions to lower their oil price forecasts. Additional pressure came from concerns over weakening global demand, particularly in China, where refinery throughput fell to its lowest level in nearly four years. Markets also reacted to signs of slowing economic growth, elevated inflation, and expectations that major central banks may maintain higher interest rates for longer.
Looking ahead, traders continued to monitor inventory trends. Analysts expected U.S. crude inventories to post another weekly decline, which would mark the eighth consecutive week of inventory drawdowns and highlight the ongoing tightness in physical oil markets despite the recent collapse in prices.