Oil prices moved lower on Tuesday, with Brent crude falling back below $100 per barrel after reports that Iran could reopen the Strait of Hormuz in exchange for U.S. military de-escalation.
By 09:45 ET, Brent crude futures had fallen 1.4% to around $98.91 per barrel. U.S. West Texas Intermediate crude declined 1.5% to approximately $94.36.
The latest losses extended a multi-day decline in global oil prices.
Brent and WTI Extend Recent Losses
Brent crude dropped 3.4% on Monday, while WTI fell 4.5%.
Both benchmarks recorded their lowest closing levels since Sept. 9 as geopolitical risk premiums continued to ease.
The decline accelerated after reports suggested that Iran may be willing to reopen the Strait of Hormuz under certain conditions.
Iran Reportedly Offers Hormuz Reopening
Iran is reportedly prepared to reopen the Strait of Hormuz within seven days if Washington begins reducing military pressure.
Kyodo News cited a senior Iranian government official as saying that Tehran had already communicated the proposal to Washington through intermediaries.
Iran is also reportedly seeking negotiations aimed at reaching a more permanent resolution to the conflict.
The Strait of Hormuz has faced severe disruption since fighting involving Iran, the United States and Israel intensified earlier this year.
Before the conflict, roughly one-fifth of the world’s oil and liquefied natural gas passed through the strategically important waterway.
UN Diplomacy Raises Hopes for Progress
Attention has now shifted to the United Nations General Assembly in New York.
Iran is expected to use the gathering to hold discussions with countries acting as intermediaries and explore possible diplomatic solutions.
Reports suggest that progress toward an agreement remains possible.
However, a direct meeting between U.S. President Donald Trump and Iranian President Masoud Pezeshkian on the sidelines of the General Assembly is not currently expected.
Trump has previously indicated that he would be open to meeting Pezeshkian.
Saudi Oil Shipments Ease Supply Concerns
Some concerns over global oil supply have also eased.
Saudi Arabia has reportedly increased crude shipments through the Strait of Hormuz.
According to a JPMorgan note cited by Reuters, Saudi oil flows through the strait averaged around 2.9 million barrels per day over a recent six-day period, well above levels recorded in August.
Saudi Arabia has also restarted operations at its important east-west pipeline after damage from recent attacks forced the route to close on Sept. 13.
Exports from the Red Sea port of Yanbu could also resume, providing another route for Saudi crude to reach global markets.
Bab el-Mandeb Remains a Key Risk
Despite improving supply conditions, geopolitical risks remain elevated.
Iran-aligned Houthi forces and Saudi-backed groups continue to fight for control of strategically important areas in Yemen.
Particular attention is focused on the Bab el-Mandeb Strait, which connects the Red Sea with the Gulf of Aden.
The route has become increasingly important for Saudi oil exports following disruptions in the Strait of Hormuz.
Any escalation around Bab el-Mandeb could therefore create renewed pressure on oil supply and shipping routes.
Libya and Russia Add to Oil Supply Risks
Supply concerns are also emerging elsewhere.
Production at Libya’s Sharara oil field has reportedly fallen to around 127,000 barrels per day from approximately 340,000 barrels per day.
The decline followed the blockage of a pipeline connecting the field with the Zawiya export terminal, according to ING analysts.
Russia may also extend restrictions on most diesel exports as attacks on energy infrastructure reduce refinery activity.
Diesel prices have already climbed to record levels in parts of the United States and Europe as exports from major producers, including Russia, Saudi Arabia and the United Arab Emirates, remain constrained.
Oil markets therefore remain caught between improving diplomatic expectations and persistent supply risks across several major producing regions.
