Oil prices were higher on Tuesday, paring losses after falling sharply in the previous session, as energy market participants assessed developments related to the Iran war.
International benchmark Brent crude futures with May delivery climbed more than 4% to $104.49 per barrel, while U.S. West Texas Intermediate futures for May traded more than 4% higher, ending at $92.35 per barrel.
The uptick follows a sharp sell-off on Monday, with Brent crude falling about 11% to around $99 per barrel after topping $112 on Friday.
Oil prices since the start of the year
“I AM PLEASE TO REPORT THAT THE UNITED STATES OF AMERICA, AND THE COUNTRY OF IRAN, HAVE HAD, OVER THE LAST TWO DAYS, VERY GOOD AND PRODUCTIVE CONVERSATIONS REGARDING A COMPLETE AND TOTAL RESOLUTION OF OUR HOSTILITIES IN THE MIDDLE EAST,” President Donald Trump said Monday in a Truth Social post.
“I HAVE INSTRUCTED THE DEPARTMENT OF WAR TO POSTPONE ANY AND ALL MILITARY STRIKES AGAINST IRANIAN POWER PLANTS AND ENERGY INFRASTRUCTURE FOR A FIVE DAY PERIOD,” Trump wrote.
Trump’s statement sent oil lower, while equities jumped. Still, the recovery on Tuesday suggests lingering skepticism over the president’s claims, which were also refuted by Iran.
“Despite the exuberance on Wall Street, ladies and gentlemen, oil is well off its lows after Tehran denied conducting any weekend negotiations with Washington,” said José Torres, senior economist at Interactive Brokers, who added that the risk of an extended war remains top of mind for the market.
Torres noted that repeated attacks on critical energy infrastructure in the Middle East had fueled concerns over potential disruptions to production and transportation.
“Additionally, in consideration of the vast number of attacks that have affected critical energy in the Middle East … there’s nervousness that there could be capacity and transportation disruptions that keep costs higher than at the beginning of the year even if there’s a deal,” he wrote in a note published on Tuesday.
The Strait of Hormuz was handling about 20% of global seaborne oil supplies until the war broke out, before Iran virtually stopped flows via the critical waterway.
Iranian state media said Sunday that Tehran would permit safe transit through the strait, except for ships associated with its “enemies.”
Read More: WTI, Brent, Middle East tensions keep markets on edge
