Oil prices moved slightly lower on Tuesday after Qatar said talks between Iran and Oman over the Strait of Hormuz had reached an advanced stage.
Qatar’s Foreign Ministry spokesperson said the negotiations are now at a critical point. Qatar has played a mediation role as regional powers try to reduce tensions in the Middle East.
Brent and WTI Trade Mixed
Brent crude futures, the global oil benchmark, slipped 0.1% to $87.61 per barrel by 08:05 ET.
Meanwhile, U.S. West Texas Intermediate crude futures edged up 0.1% to $82.22 per barrel.
The small moves came after a sharp rally on Monday, when both Brent and WTI settled more than 5% higher.
Oil Rally Follows U.S.-Iran Tensions
Oil prices jumped earlier after President Donald Trump said he would seek compensation from Iran as part of any peace agreement.
Iran also reportedly demanded reparations and other concessions.
These developments raised concerns that a long disruption to energy supplies could keep inflation high. That could also increase pressure on the Federal Reserve to consider further interest rate hikes.
Hormuz Status Remains Unclear
The U.S. and Iran have given conflicting views on the current status of the Strait of Hormuz.
Washington has suggested that the key waterway remains open for commercial shipping. Tehran, however, has said the route is effectively closed due to mines and drones.
The mixed signals have kept oil markets volatile.
Deal Hopes Continue to Move Oil Prices
Recent optimism around a possible U.S.-Iran agreement had pushed oil prices lower last week.
However, those hopes weakened after both sides introduced fresh demands.
Analysts at ING said oil remains highly sensitive to headlines around a possible deal. They noted that markets often react positively when negotiations appear to improve, only for that optimism to fade quickly.
Iran Says Shipping Deal With Oman Is Close
Iran said it is close to a final agreement with Oman on new shipping routes through the Strait of Hormuz.
However, Tehran also said the U.S. must meet other conditions before the waterway can fully reopen. These include lifting all sanctions.
The Strait of Hormuz is one of the world’s most important oil transit routes. Before the conflict escalated in late February, it handled roughly one-fifth of global oil supplies.
Shipping Traffic Remains Weak
Tanker traffic briefly improved after a framework U.S.-Iran ceasefire deal in June.
However, activity has declined again after renewed Iranian attacks on vessels in the region weakened the fragile agreement.
According to Reuters, citing Kpler data, only four commodity vessels moved through the Strait of Hormuz on Monday. These included two empty oil product tankers.
A small liquefied natural gas tanker and another vessel carrying residual fuels also exited the strait.
The recent 10-day average for sailings is around 11 vessels, showing that traffic remains far below normal levels.
Oil Market Outlook
Oil traders are now watching the Iran-Oman talks closely.
A diplomatic breakthrough could ease supply concerns and put pressure on crude prices. However, any setback could quickly revive fears of prolonged disruption in the Strait of Hormuz.
For now, oil prices remain highly sensitive to Middle East headlines, shipping data, and inflation expectations.
