Oil prices moved lower on Tuesday as markets weighed hopes for a de-escalation between the United States and Iran against renewed attacks and growing risks to regional energy supplies.

Brent and WTI Move Lower

As of 04:15 GMT, Brent crude futures fell 0.9% to $88.44 per barrel.

U.S. West Texas Intermediate crude also declined 0.9% to $82.50 per barrel, while the more actively traded September contract slipped 0.5% to $82.07 per barrel.

The pullback followed reports that mediators had proposed a 10-day ceasefire between the United States and Iran.

Diplomatic Hopes Support Market Sentiment

According to ING, a temporary ceasefire could help revive the interim agreement signed on June 17 and reopen the path toward a broader peace deal.

However, a breakthrough remains uncertain because major differences still exist between Washington and Tehran. The United States has also warned of retaliation following the deaths of several U.S. troops.

The diplomatic push comes as the United States continues to strike Iranian cities, while Iran’s Revolutionary Guards have targeted U.S. military assets across the region.

Supply Risks Remain Elevated

A tanker in the Strait of Hormuz reported being hit by an unidentified projectile, forcing its crew to abandon the vessel. Ship traffic through the key waterway has also declined as security concerns grow.

Meanwhile, Yemen’s Iran-aligned Houthis said they would impose a naval blockade on Saudi Arabia.

The threat raises the risk of disruption to another major oil exporter and could widen the impact on global energy supplies and trade beyond the Gulf.

Markets Await U.S. Inventory Data

A preliminary survey indicated that U.S. crude oil and gasoline inventories may have fallen last week, while distillate stocks were expected to rise.

The inventory data will be closely watched for further signals about the short-term balance between supply and demand.

Conclusion

Oil prices are currently being pulled in opposite directions.

Hopes for a temporary ceasefire are easing some of the upward pressure, but renewed attacks, risks in the Strait of Hormuz, and threats against Saudi Arabia continue to cloud the supply outlook.

In the near term, oil prices are likely to remain highly sensitive to diplomatic and security developments in the Middle East.

Source: Reuters