LONDON: Global oil prices fell on Tuesday after recent sharp gains, as investors assessed whether tensions in the Strait of Hormuz would disrupt efforts to restore shipping through one of the world’s most critical energy routes.
Brent crude futures dropped more than 3% to around $111 per barrel by 1310 GMT, after rising 4.4% in the previous session on fears of supply disruptions.
Prices were reported at approximately $111.4 a barrel during trading.
Brent crude later traded at $113.06 per barrel, down $1.38, while US West Texas Intermediate crude fell $2.21 to $104.26, after posting gains of 5.8% and 4.4% respectively in the previous session.
The decline came despite continued exchanges of fire between the United States and Iran near the strategic waterway.
US forces claimed on Monday that they had repelled Iranian attacks while escorting two American-flagged vessels through the Strait of Hormuz.
The US military added that commercial ships were also defended against drones and small boats.
US President Donald Trump said on Monday that the conflict with Iran could continue for another two or three weeks.
“Time is not of the essence for us,” Trump said in a phone interview with radio host Hugh Hewitt.
On Monday, the UAE reported intercepting Iranian missiles and confirmed a fire at its Fujairah oil terminal.
The latest developments follow a US plan to restore transit through the Strait of Hormuz and assist stranded vessels.
Shipping group Maersk said the US-flagged car carrier Alliance Fairfax had exited the Gulf through the strait under US military escort.
Analyst Tim Waterer said the development indicated that limited safe passage was possible.
“This shows that limited safe passage is possible under current conditions and helps reduce some of the worst fears about supply disruptions,” he said in a note.
“However, this remains an exceptional event rather than a full reopening of the passage,” he added.
Oil markets have remained highly sensitive to developments in the Strait of Hormuz, a key transit route for global oil and gas exports.
Tensions escalated after the United States launched a naval operation aimed at breaking an Iranian blockade and escorting stranded ships.
US forces said they had destroyed six small Iranian boats and intercepted missiles and drones, while Iranian officials claimed targeting a US frigate in the strait.
Global oil prices fell by an average of around 1.5% on Tuesday, retreating from recent highs due to profit-taking and some easing of immediate fears, though volatility persisted.
On Wall Street, the Dow Jones Industrial Average rose 0.41%, while the S&P 500 gained 0.63% and the Nasdaq Composite advanced 0.87%.
The rebound followed a volatile start to the week, when geopolitical risks weighed on investor sentiment.
Investor sentiment remained divided, with geopolitical uncertainty offset by strong corporate earnings and economic data.
Shares of DuPont rose after the company lifted its annual profit forecast, while Pinterest surged on stronger-than-expected revenue guidance.
However, PayPal fell sharply after issuing a weak outlook, and Palantir Technologies declined despite reporting better-than-expected results.
In broader markets, the S&P 500 rose 0.6% and moved towards record levels, while the Nasdaq also edged higher.
In Europe, France’s CAC 40 gained 0.6%, while London’s FTSE 100 fell 1.7%. In Asia, Hong Kong’s Hang Seng slipped 0.8%, with several markets closed for holidays.
