Global oil prices fell sharply on Tuesday, with Brent crude dropping to $79.16 a barrel and US West Texas Intermediate (WTI) to $75.64, marking a decline of more than 5 percent. The drop came as traders reacted to growing expectations of a diplomatic breakthrough between the United States and Iran over tensions in the Middle East, despite no formal agreement being announced. Treasury Secretary Scott Bessent suggested a deal could emerge as early as Tuesday or Wednesday, while Secretary of State Marco Rubio cited progress in indirect talks mediated by Oman. President Donald Trump described a deal to reopen the Strait of Hormuz and limit Iran's nuclear activities as "imminent," further fueling market sentiment.
Iran, however, maintained it was not in direct talks with the US, emphasizing that discussions were ongoing through Omani intermediaries and that it sought greater control over shipping movements through the Strait of Hormuz. Shipping data showed minimal change in regional traffic, with only six vessels passing through the Strait on Monday, down from seven the previous day, and no significant shift in flows through the Bab el-Mandeb Strait. A cargo vessel was reportedly hit near Oman, underscoring ongoing security risks. Before hostilities began in February, nearly 20 percent of global oil and gas supplies moved through the Strait of Hormuz. Since then, over 2.6 billion barrels of oil supply have been lost, according to Saudi Aramco. Analysts noted the price drop reflected market expectations rather than improved physical conditions, and Goldman Sachs projected Brent would remain between $80 and $90 unless a deal is confirmed or tensions worsen.
Markets are reacting to statements from US officials while Iran denies direct negotiations, creating a disconnect between perception and confirmed diplomacy. This gap could lead to volatile price swings that affect global energy costs before any real resolution is in place.
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