Oil prices slipped on Tuesday as hopes of renewed diplomacy between the United States and Iran eased fears of further disruptions to Middle East oil supplies.
Brent crude fell 0.6% to US$87.82 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped 0.8% to US$81.95. Earlier in the session, both benchmarks fell by around 1%, reaching their lowest levels in more than a week.
The decline came after U.S. President Donald Trump said Washington was holding “good talks” with Iran and that there was a chance of resolving tensions through negotiations. However, he warned that U.S. military strikes could resume if talks fail, while Iran also signalled it would retaliate if conflict escalates.
Analysts said the pause in military action has reduced immediate concerns over oil supply disruptions in the region.
Tony Sycamore, a market analyst at IG, said investors welcomed the possibility of a diplomatic solution, although the situation remains uncertain. He noted that concerns over attacks on Saudi oil infrastructure have eased for now.
At the same time, risks remain around key shipping routes. Yemen’s internationally recognised government said Houthi fighters are trying to expand their influence over shipping through the Bab el-Mandeb Strait, similar to Iran’s position near the Strait of Hormuz.
Edward Meir, an analyst at Marex, said shipping traffic has already fallen sharply through the Red Sea and the Strait of Hormuz. However, he questioned whether the Houthis have the military strength to enforce a full blockade.
Analysts also pointed to weaker oil demand, particularly in Asia, as another factor keeping prices under pressure.
Meanwhile, Barclays said oil shipments through the Strait of Hormuz remain below normal levels. Net exports averaged 2.9 million barrels a day in the week ending July 24, compared with 5.9 million barrels a day a week earlier.
Investors are also watching U.S. oil inventory data due later this week. A Reuters survey suggests crude oil and petrol stocks likely fell last week, while distillate inventories may have increased.
Last modified: July 28, 2026
