Crude prices pulled back modestly on Tuesday after a sharp surge in the previous session, as investors weighed intensifying tensions in the Gulf against U.S. efforts to keep maritime traffic flowing through the Strait of Hormuz.
As of 05:21 ET (09:21 GMT), Brent crude was down 1.1% at $113.16 per barrel, while U.S. West Texas Intermediate crude declined 1.9% to $104.37 per barrel.
Rally Fueled by Escalation
In the prior session, Brent advanced more than 4% and WTI rose roughly 6%, driven by a flare-up in hostilities between the United States and Iran, including strikes on energy assets and vessels transiting the strait.
There are tentative signs that Iran’s hold over the chokepoint may be easing. Shipping major A.P. Moller-Maersk A/S said a U.S.-flagged car carrier operated by one of its subsidiaries exited the Gulf via the strait with U.S. military assistance.
Ceasefire Fragility Keeps Markets Cautious
Even so, sentiment remains fragile after fresh exchanges on Monday, with U.S. and Iranian forces launching new attacks in the Gulf as each side sought to assert control over the waterway.
The flare-up has shaken an already tenuous ceasefire and amplified concerns about extended supply disruptions. Tensions escalated further after reported Iranian strikes on infrastructure in the United Arab Emirates, including an oil terminal in Fujairah.
“A re-escalation of tensions in the Persian Gulf pushed oil and gas prices higher as the market once again reprices the duration of supply disruptions from the region,” ING analysts said in a note.
Diplomacy vs. Military Moves
Iranian Foreign Minister Abbas Araghchi said on Monday that military action would not resolve the Strait of Hormuz crisis, though he noted that talks in Pakistan were making progress.
U.S. President Donald Trump has rolled out an initiative dubbed “Project Freedom,” aimed at assisting stranded vessels in the Gulf with military support.
The effort is intended to steer commercial shipping along safer routes and partially restore flows through the strait, which handles about one-fifth of global crude supply. Oil has climbed markedly since the conflict began in February, heightening concerns about a global inflation shock.
“Any relief from stranded vessels making their way through the Strait will be temporary, with very few inbound vessels moving into the Persian Gulf,” ING analysts wrote.
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