Oil prices tumbled Tuesday as traders once again priced in a U.S.-Iran agreement before anyone had actually signed one.
West Texas Intermediate was trading at $75.64 per barrel shortly before 2 p.m. ET, down $4.70, or 5.85%, while Brent had fallen $4.61 to $79.16. Both benchmarks touched three-week lows as hopes rose that an agreement could reopen the Strait of Hormuz.
Treasury Secretary Scott Bessent said a deal could come Tuesday or Wednesday, while Secretary of State Marco Rubio said talks involving Iran and Oman had made progress. Qatar also said diplomatic efforts were continuing. President Donald Trump went further, calling an agreement to reopen the strait and denuclearize Iran “imminent.”
Iran, naturally, offered a less tidy version. Tehran has denied holding direct talks with Washington and says it is negotiating through mediators in Oman. Iran is also seeking control over inbound shipping and visibility over outbound traffic, with the ability to intervene when it sees fit.
Actual shipping data offered little support for Tuesday’s enthusiasm. Just six vessels were tracked moving through Hormuz on Monday, down from seven a day earlier, while traffic through Bab el-Mandeb was also largely unchanged. A cargo vessel was also struck near Oman, adding another complication to the negotiations.
Before the war, roughly one-fifth of global oil and gas supply moved through Hormuz. Persian Gulf producers have since been forced to slash output, and Saudi Aramco estimates the world has lost more than 2.6 billion barrels since fighting began in February.
Goldman Sachs expects Brent to remain between $80 and $90 until there is either a confirmed agreement or another major escalation. Brent was already below that range Tuesday afternoon, suggesting traders may have gotten a little ahead of the diplomats.
Oil has spent months whipping between peace headlines and missile strikes while physical flows remain badly impaired.
By Julianne Geiger for Oilprice.com
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