Oil prices moved sharply lower on Tuesday, reversing earlier gains after several reports suggested possible progress in Middle East peace negotiations.
Brent crude futures fell 1.8% to $82.23 per barrel by 07:45 ET, after climbing more than 2.5% earlier in the session.
U.S. West Texas Intermediate crude futures dropped 2.6% to $78.24 per barrel.
Bessent Signals Possible U.S.-Iran Agreement
U.S. Treasury Secretary Scott Bessent said Washington and Tehran could be approaching an agreement.
During an interview with CNBC, Bessent suggested that a deal could be reached within the next day or two. The potential agreement would focus on reopening the Strait of Hormuz and reducing tensions in the region.
The comments increased hopes that energy shipments through the strategically important waterway could begin returning to normal.
Qatar Continues Diplomatic Efforts
Qatar also said diplomatic efforts to resolve the conflict were continuing.
According to media reports, negotiations are focused on de-escalation and reopening the Strait of Hormuz.
Qatar has played a central role as a mediator between the United States and Iran. Reports suggested that draft language for a possible agreement had already been prepared and circulated among negotiators.
However, no agreement on direct U.S.-Iran talks has been confirmed. Qatar is reportedly prioritizing a short-term resolution.
Conflicting Statements Create Market Uncertainty
Investors continued to assess mixed signals from Washington and Tehran.
U.S. President Donald Trump said discussions with Iran were underway and warned that the country faced a final opportunity to reach an agreement.
Iranian Foreign Ministry spokesperson Esmaeil Baqaei denied that formal negotiations with the United States were taking place.
Instead, he said Iran was working with Oman on arrangements to allow ships to travel through the Strait of Hormuz.
Strait of Hormuz Remains Crucial for Oil Markets
The Strait of Hormuz is one of the world’s most important energy routes.
Around one-fifth of global oil and liquefied natural gas supplies pass through the narrow waterway. Any prolonged closure or disruption could significantly tighten global energy supplies and drive prices higher.
The conflicting statements from the U.S. and Iran left the outlook uncertain and reduced confidence that a lasting diplomatic breakthrough was close.
Risk of Renewed Escalation Remains
Hopes for an agreement had improved after Trump canceled planned U.S. strikes on Iran over the weekend.
However, analysts at ING warned that similar moments of optimism had broken down in the past.
They noted that Iran’s denial of direct negotiations, combined with warnings from the U.S. administration, left substantial room for tensions to increase again.
U.S. Crude Exports Drop to Eight-Month Low
Separate data showed that U.S. crude exports fell to 3.66 million barrels per day in July, their lowest level in eight months.
Demand for American oil weakened as increased Middle Eastern supplies returned to the market following a temporary ceasefire in June.
For now, oil prices remain highly sensitive to diplomatic developments, shipping conditions in the Strait of Hormuz, and the risk of renewed conflict between the United States and Iran.
