Brent crude slips below $90 as ceasefire talks between US and Iran gain traction, while Houthi blockade threat on Saudi Arabia so far fails to rattle the market.
Crude oil futures fell Tuesday morning after reports that mediators proposed a 10-day ceasefire between the U.S. and Iran, easing fears of a broader conflict that could disrupt supplies from the Persian Gulf.
September Brent futures on ICE settled at $88.48 a barrel, down 0.83%, while West Texas Intermediate crude fell to $82.11, a 0.45% decline. August crude on the Multi Commodity Exchange opened at ₹7,942, down 0.09% from the previous close.
Warren Patterson, head of commodities strategy at ING Think, and Ewa Manthey, commodities strategist, said in a note that prices closed higher Monday but retreated from session peaks, leaving Brent back below $90. They said early Tuesday trading was lower. ING, which holds an Alpha Score of 75 on AlphaScala's proprietary rating, is rated Strong in the financial services sector.
“There’s some hope of de-escalation between the US and Iran. Reports are that mediators are proposing a 10-day ceasefire, which could put the memorandum of understanding back on track. This won’t be an easy task. Large divisions remain between the US and Iran,” they said.
At the same time, the Houthis in Yemen announced a naval blockade on Saudi Arabia, putting oil supply at increased risk. Since disruptions hit the Persian Gulf, Saudi Arabia has increased exports from Yanbu on the Red Sea, shipping about 4.6 million barrels a day of crude in June, up from around 1.3 million barrels a day at the start of the year, the analysts noted. An effective blockade would force vessels to avoid the Bab el-Mandeb Strait and take the longer route around Africa, adding cost and time.
“It’s yet to be seen how effective any blockade will be. But, clearly, this development will increase insurance costs. If shippers decide to avoid the Bab el-Mandeb Strait, voyage times will be longer and more expensive. Looking at oil price action this morning, the market is not convinced that this blockade will be successful,” they said.
The U.S. Central Command said it completed another round of strikes against Iran on July 20, targeting military command centers, maritime capabilities, missile and drone launch sites, and air defense systems. The command said commercial vessel transits through the Strait of Hormuz continued, and since early May it has helped facilitate the transit of about 900 commercial vessels and 450 million barrels of crude oil.
President Donald Trump posted on Truth Social: “Every time Iran kills an American Soldier, they will pay for that killing many times over! This directive has been passed on to Secretary of War, Pete Hegseth, Chairman of the Joint Chiefs of Staff, Daniel Caine, and every Leader in the Military.”
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