Brent crude traded at $93.13 a barrel at 10.25 a.m. local time (0725 GMT) on Tuesday, down about 1.19% from the previous close of $94.25. West Texas Intermediate slid about 1.65% to $89.79, against $91.3 in the prior session. Two announcements and one presidential forecast did the work.
The day before, oil had jumped as much as 5%. Israel had struck Iran again and attacked Lebanon, and hopes for a quick ceasefire faded. Then diplomacy cut into the gains.
A fragile ceasefire, tested
Tensions in the region have climbed since the US and Israel launched airstrikes on Iran on Feb. 28. A ceasefire brokered in April faced its toughest test yet on Sunday, when Israel bombed Beirut despite a separate ceasefire in Lebanon. Iran answered by firing missiles toward northern Israel, and Israel carried out several waves of airstrikes on Iran.
Early Monday, Iran’s military said it was halting attacks on Israel. It also warned of a “crushing” response if Israeli attacks on Lebanon went on. Israeli media, citing unnamed officials, reported that Israel had agreed to stop airstrikes on Iran but would keep operating in southern Lebanon. Prices eased once both sides signalled an end to the exchange.
Trump’s remarks
Losses grew after President Donald Trump said late Monday that the United States would declare “total victory” over Iran within the next two weeks. Early Tuesday he said talks between Washington and Tehran had carried on despite the violence. Traders read that as a better chance of a diplomatic settlement and less risk to supply.
On the Strait of Hormuz, Trump said: “The Strait will open up right away, it’ll open up immediately upon signing, which could be in two or three days.”
Oil is still pricier than before the conflict. About a fifth of the world’s crude supply normally moves through the strait, and uncertainty over its status has not gone away.
