Oil prices continued to move lower on Tuesday as traders assessed the chances of a Strait of Hormuz reopening and examined the early stages of a new agreement involving Iran, the United States, and Israel. Investors also focused on weak demand signals from major markets, which added pressure to crude prices.
Brent crude futures fell by 25 cents to $82.92 per barrel during early trading. Meanwhile, U.S. West Texas Intermediate crude lost 9 cents and traded at $80.66 per barrel. The declines followed a sharp drop on Monday, when oil prices slid nearly 5% after President Donald Trump announced a memorandum of understanding aimed at ending the conflict involving Iran and Israel.
The military confrontation disrupted energy flows through the Strait of Hormuz, one of the world’s most important oil transit routes. Before the conflict, the passage handled roughly one-fifth of global oil shipments. As a result, any progress toward a Strait of Hormuz reopening remains a major factor for global energy markets.
Analysts at Morgan Stanley expect oil transportation through the region to recover gradually rather than immediately. They believe tanker traffic will need several weeks to return to normal levels. Their projections suggest that about half of the affected production could return by September, with recovery reaching around 80% by December.
At the same time, several indicators point to weakness in the physical oil market. Strong export volumes from the United States continue to add supply. In contrast, Chinese demand has remained soft, reducing support for prices.
China’s crude oil imports dropped sharply in May. Imports fell 29% compared with previous levels and reached their lowest point in eight years. Expectations for lower Saudi crude purchases in July have also increased concerns about demand from the world’s largest oil importer.
Market participants continue to monitor details of the emerging agreement between Washington and Tehran. Early reports suggest the deal could lead to the reopening of the blocked waterway and extend a ceasefire for 60 days. Negotiators would then use that period to address more complex issues, including Iran’s nuclear program.
Iranian President Masoud Pezeshkian described the agreement as an important development that could help reduce tensions. However, he emphasized that negotiators still need to create a framework for a lasting peace. His comments highlighted the uncertainty that remains despite recent progress.
Energy analysts believe the next phase of negotiations will carry the greatest importance for oil markets. Suvro Sarkar, who leads energy research at DBS Bank, said the initial ceasefire extension was relatively straightforward. He noted that the more difficult stage involves restoring normal maritime activity and reducing restrictions on Iranian shipping.
According to Sarkar, markets will closely watch how both sides implement the agreement. Any delays or disagreements could quickly bring volatility back to oil trading. He added that trust between the parties remains fragile after years of tensions.
The prospect of a Strait of Hormuz reopening has improved market sentiment, but traders remain cautious. Many investors want to see concrete actions before changing their long-term outlook. Until clearer details emerge, oil prices may continue to react to both political developments and demand trends.
A senior Iranian official also indicated that Iran would pause nuclear activities while negotiations continue. The official stated that the country would not expand uranium enrichment efforts or build additional nuclear facilities during this period. Those commitments could support ongoing diplomatic efforts and reduce fears of renewed conflict