Oil prices dropped sharply on Tuesday as fresh peace talks between the United States and Iran eased worries about a prolonged Middle East supply crunch, with Brent slipping below $84 a barrel after trading above $100 just last week.
Figures from Oilprice.com showed Brent falling from around $87 on Monday to roughly $83.92 on Tuesday, while the US benchmark, West Texas Intermediate, dropped to about $79.
The slide came as talks between Washington and Tehran gained traction, easing fears that the Strait of Hormuz, a chokepoint that carries around a fifth of the world’s crude, could stay shut for much longer.
Prices had spiked earlier after US strikes on Iran in late February targeted Tehran’s nuclear ambitions, triggering a wave of retaliatory attacks that disrupted Gulf shipping and forced a closure of the strait. The waterway reopened last month under a US-Iran ceasefire but shut again recently after renewed exchanges of strikes between the two sides.
Tuesday’s developments hinted at possible movement toward reopening it once more. Reuters reported that Iran had floated a temporary arrangement with Oman, under which maritime traffic in one direction would pass through Iranian waters, with part of the return route also crossing Iranian territory.
Iran’s Deputy Foreign Minister, Kazem Gharibabadi, said Tehran had turned down Oman’s counterproposal for an even split of transit routes, arguing it didn’t address Iran’s security concerns while regional stability remains unresolved. He warned the strait would stay closed if Muscat didn’t accept Iran’s terms, adding that Tehran has never recognised the southern shipping route running along Oman’s coast.
Still, the possibility of shipping resuming through the strait helped calm markets and unwind some of last week’s price rally.
US President Donald Trump said talks with Iran were going well but cautioned that military action remained on the table if diplomacy collapsed. In a Fox News interview on Tuesday, he said he’d rather avoid further strikes but threatened to hit Iran’s infrastructure, including power plants, bridges, and its underground “Kolang Mountain” nuclear site, if no deal is reached. He claimed he could take out Iran’s power plants in a single day, cutting electricity to roughly 91 million people, and said most of the country’s major bridges could be destroyed in under two hours.
Trump added that Washington would no longer overlook what it considers violations of a memorandum previously agreed with Tehran. Ahead of a White House meeting with Israeli Prime Minister Benjamin Netanyahu, he brushed off suggestions that the US needed Israeli intelligence on the Kolang Mountain facility, saying Washington already has full knowledge of the site. He also said earlier US strikes on Natanz, Fordow, and Isfahan had already set back Iran’s nuclear programme significantly, and warned the underground facility would be next if talks fail.
