Oil prices slipped about 1% during Asian trading on Tuesday, reversing earlier gains after a report suggested that Donald Trump may be open to ending the US military campaign against Iran without immediately reopening the Strait of Hormuz.
Brent crude futures for May dropped $1.22, or 1.08% to $111.56 per barrel after initially rising 2%, while the more active June contract traded at $105.76. Meanwhile, West Texas Intermediate crude for May fell 98 cents to $101.90 per barrel after earlier hitting its highest level since March 9.
The decline appears to be a short-term market reaction to potential de-escalation.
Analysts note that any sustained drop in oil prices would depend on the full restoration of oil flows through the Strait of Hormuz, a critical route that carries roughly 20% of the world’s oil supply.
According to a report by The Wall Street Journal, Trump has indicated a willingness to halt the conflict even if the waterway remains mostly closed for now. However, he also warned that the US could target Iran’s energy infrastructure if Tehran does not reopen the passage.
Tensions in the region have already driven oil prices sharply higher, with Brent and WTI both surging nearly 60% in March. Ongoing uncertainty, conflicting political signals, and damage to infrastructure are expected to keep supply tight and markets volatile.
Adding to concerns, a tanker operated by Kuwait Petroleum Corporation was reportedly struck in an alleged Iranian attack near Dubai, raising fears of oil spills. At the same time, Iran-aligned Houthi forces in Yemen have escalated risks by targeting Israel, increasing threats to shipping routes such as the Bab el-Mandeb Strait.
To maintain exports, Saudi Arabia has been rerouting crude shipments via the Red Sea, significantly increasing volumes through alternative routes. In the US, declining crude and fuel inventories are also contributing to market uncertainty.
Overall, analysts say oil prices are likely to remain volatile as mixed signals about the conflict continue and supply disruptions persist.
