Oil Rebounds Modestly as Markets Assess Unconfirmed US-Iran Talks and Strait of Hormuz Risks

Oil prices edged higher Tuesday, recovering modestly after Monday's sharp selloff, as traders weighed conflicting signals over potential diplomatic developments between the United States and Iran and their implications for Gulf shipping.

→ Brent crude rose 0.7% to $84.39/barrel, after falling 7% Monday to a three-week low.

→ WTI crude gained 0.7% to $80.95, following a decline of more than 5% to a near one-week low.

The selloff followed President Trump's Sunday statement that he was pausing new strikes on Iran pending talks over the Strait of Hormuz, the waterway through which roughly 20% of global daily oil consumption transits. Iran's Foreign Ministry, however, denied any negotiations were underway or scheduled, according to spokesperson Esmail Baghaei.

Key market developments:

→ Barclays data showed crude and refined product exports through the Strait of Hormuz rose to 4.2 million barrels per day in the week ended July 31, up from 3.2 million barrels per day the previous week, suggesting shipping flows continued despite the conflict.

→ Six Saudi-flagged supertankers rerouted via the Gulf of Aden toward southern Africa, while two Saudi oil tankers crossed the Bab el-Mandeb Strait, according to shipping data.

→ The UK Maritime Trade Operations (UKMTO) reported that a cargo vessel was struck by an unidentified projectile about 20 nautical miles northeast of Oman's Al Khasab on Tuesday.

"The move lower remains fragile — oil could just as easily rebound higher if missiles start flying again or tankers come under fire once more," said Tim Waterer, chief market analyst at KCM Trade, noting that risks around both the Strait of Hormuz and the Red Sea were contributing to the geopolitical risk premium reflected in oil prices.

Market focus: Market participants continue to monitor official statements from Washington and Tehran, alongside developments affecting shipping activity in the Strait of Hormuz and surrounding waterways. Analysts said confirmation of diplomatic talks or additional security incidents could influence near-term market sentiment.

Sources: Reuters, Barclays, UK Maritime Trade Operations (UKMTO), KCM Trade