Oil prices retreated in Asian trading on Tuesday, reversing earlier gains after reports suggested that Donald Trump is open to ending the ongoing military campaign against Iran—even if the strategic Strait of Hormuz remains largely closed for now.
Brent crude futures for May delivery fell by $1.22, or 1.08%, to $111.56 per barrel by 0210 GMT, after earlier rising 2% during the session. The more actively traded June contract stood at $105.76. Meanwhile, US West Texas Intermediate (WTI) crude for May declined by 98 cents, or 0.95%, to $101.90 per barrel, after reaching its highest level since March 9 earlier in the day.
Market analysts attributed the dip to short-term sentiment driven by potential de-escalation. However, they cautioned that a sustained price correction hinges on the full restoration of oil flows through the Strait of Hormuz, a critical artery responsible for nearly one-fifth of global oil shipments and significant volumes of liquefied natural gas.
According to a report by The Wall Street Journal, Trump conveyed to aides his willingness to halt military operations without immediately securing the reopening of the waterway, deferring that objective to a later stage. This follows his earlier warning that the US could “obliterate” Iran’s energy infrastructure if Tehran fails to restore maritime access.
Despite the recent pullback, oil prices have surged dramatically in March, with Brent rising 59% and WTI climbing 58%—marking their steepest monthly gains in years—driven by Iran’s effective blockade of the Strait.
Geopolitical risks continue to weigh heavily on the market. Kuwait Petroleum Corporation reported that one of its fully loaded crude tankers was struck in an alleged Iranian attack near Dubai, raising concerns over potential oil spills and maritime safety.
Tensions have also escalated around the Bab el-Mandeb Strait, where Iran-aligned Houthi forces in Yemen reportedly launched missiles toward Israel, threatening another key global shipping route linking Asia and Europe via the Suez Canal.
In response to disruptions in the Gulf, Saudi Arabia has rerouted crude exports through the Red Sea. Shipments to the port of Yanbu surged to 4.658 million barrels per day last week, a sharp increase from earlier months, according to Kpler data.
Meanwhile, in the United States, a preliminary Reuters poll indicated a likely decline in crude, gasoline, and distillate inventories last week, offering some support to prices.
Analysts warn that conflicting signals and rapid geopolitical developments are creating a volatile environment. With uncertainty surrounding both diplomatic efforts and physical supply routes, oil markets are expected to remain highly reactive and directionless in the near term.
By Reuters
