TLDR
- Brent crude decreased more than 1% to $94.44 following Monday’s 5.6% surge, after Iran confirmed plans to send representatives to Pakistan discussions
- The US-Iran ceasefire reaches its Wednesday deadline, with Trump stating an extension appears “highly unlikely”
- Strait of Hormuz transportation continues at minimal levels, eliminating approximately 20% of worldwide crude availability
- Saudi Arabia and UAE have redirected crude shipments via alternate facilities, with joint terminal activity increasing to 6.5 million barrels daily
- Citigroup projects potential price surge to $110 per barrel should Hormuz obstacles persist beyond four weeks
Crude oil markets experienced downward pressure Tuesday after Tehran signaled willingness to participate in diplomatic discussions with Washington in Islamabad, Pakistan. This development emerged despite public resistance from Iranian leadership regarding additional negotiations.
Brent crude declined up to 1.1% reaching $94.44 per barrel, reversing some of Monday’s 5.6% rally. West Texas Intermediate decreased 0.9% to $86.68 per barrel during Asian trading sessions.
Iranian parliament speaker Mohammad Bagher Ghalibaf stated the nation would reject negotiations “under the shadow of threats” from Washington. However, the Wall Street Journal reported that Tehran privately communicated to regional mediators its intention to dispatch a delegation to Pakistan during the current week.
The identity of the Iranian delegation leader remains undisclosed.
Vice President JD Vance is en route to continue diplomatic efforts, anticipated to arrive either late Tuesday or Wednesday morning. Trump stated Sunday that extending the ceasefire beyond Wednesday evening Washington time appears “highly unlikely.”
Trump additionally confirmed that US naval enforcement operations targeting Iran will remain active pending a comprehensive peace agreement. The US Navy intercepted an Iranian vessel during the weekend, prompting Tehran to reinstate restrictions on the Strait of Hormuz.
Hormuz Shipping Remains Stalled
The Strait of Hormuz has experienced effective closure since hostilities commenced in late February. Iran temporarily permitted passage through the channel during the weekend before reimposing restrictions.
Only three vessels made transit attempts through the strait early Tuesday. The waterway typically facilitates approximately one-fifth of global crude oil supplies.
ANZ analysts observed that the “ongoing uncertainty continues to overshadow any peace agreement” as Iran demonstrates hesitation toward returning to discussions.
Saudi Arabia and the UAE have begun redirecting crude shipments to bypass Hormuz. Alternative routes include the Yanbu terminal located in the Red Sea and the Fujairah terminal positioned in the Gulf of Oman. Combined throughput at these facilities has climbed to 6.5 million barrels daily, compared to 5.0 million before hostilities began.
What Analysts Are Saying
Citigroup projected crude prices could climb to $110 per barrel should Hormuz disruptions extend for an additional four weeks.
The International Energy Agency’s executive director Fatih Birol cautioned that worldwide energy markets could experience volatility extending up to two years resulting from the ongoing conflict.
Pepperstone research strategist Dilin Wu indicated markets will demonstrate “super sensitive to any headline updates in the next 24 hours.”
Chinese President Xi Jinping advocated for an immediate cessation of hostilities and the resumption of standard Hormuz transit Monday, during a telephone conversation with Saudi Crown Prince Mohammed bin Salman.
As of Tuesday morning, no confirmation of a second round of US-Iran diplomatic meetings had been established, while the ceasefire deadline remains set for Wednesday evening.
