Global oil prices fell sharply on Tuesday as renewed peace talks between the United States and Iran eased concerns over prolonged supply disruptions in the Middle East, pushing Brent crude below $84 per barrel after trading above $100 last week.
According to data from Oilprice.com, Brent crude, the global benchmark, declined from around $87 per barrel on Monday to approximately $83.92 on Tuesday, while the US benchmark, West Texas Intermediate (WTI), dropped to about $79 per barrel.
The decline followed renewed diplomatic efforts between Washington and Tehran, raising hopes for the reopening of the Strait of Hormuz, a vital global shipping route that carries about one-fifth of the world’s crude oil.
Oil prices had surged after the United States launched strikes on Iran on February 28 in a bid to halt Tehran’s nuclear programme. The ensuing exchange of attacks disrupted Gulf shipping and forced the closure of the Strait of Hormuz, triggering fears of a major global supply shock.
Although the strategic waterway was reopened following a ceasefire agreement last month, it was later closed again as hostilities resumed between the two countries.
Fresh developments on Tuesday, however, suggested progress toward reopening the strait.
Reuters reported that Iran proposed to Oman a temporary arrangement allowing one direction of maritime traffic to pass through Iranian waters, while part of the opposite route would also transit Iranian territory.
Iran’s Deputy Foreign Minister, Kazem Gharibabadi, said Tehran rejected Oman’s proposal for an equal division of shipping routes, arguing that it failed to address Iran’s security concerns until long-term regional stability is achieved.
He warned that the Strait of Hormuz would remain closed if Oman rejected Iran’s proposal, adding that Iran had never recognised the southern shipping lane along Oman’s coast.
The prospect of restoring oil shipments through the strategic waterway helped calm global markets, reversing part of last week’s sharp price rally.
Meanwhile, US President Donald Trump said negotiations with Iran were making progress but warned that Washington was prepared to resume military action if diplomacy failed.
In an interview with Fox News, Trump said he preferred to avoid further strikes but threatened to target Iran’s critical infrastructure, including power plants, bridges and the underground “Kolang Mountain” nuclear facility, if no agreement was reached.
“I could knock out all their power plants in one day. About 91 million people would be left without electricity and without bridges. But if I can avoid doing that, I’d prefer for it not to happen,” Trump said.
He also claimed that most of Iran’s major bridges could be destroyed “in under two hours” and insisted the US would no longer tolerate what it viewed as violations of previous agreements with Tehran.
Ahead of talks with Israeli Prime Minister Benjamin Netanyahu at the White House, Trump dismissed suggestions that Washington relied on Israeli intelligence regarding the “Kolang Mountain” facility, saying the US already had complete knowledge of the site.
He further claimed that previous American strikes had significantly weakened Iran’s nuclear programme by targeting facilities in Natanz, Fordow and Isfahan during last year’s conflict, warning that the underground facility would also be attacked if diplomatic efforts collapse.
