Oil futures edged higher on Tuesday as market participants weighed the latest signals from negotiations between the United States and Iran, with lingering uncertainty over a possible de-escalation keeping trading sentiment on edge. West Texas Intermediate (WTI) crude rose by 0.66 percent to USD 97.03 per barrel, while the international benchmark, Brent crude, gained 0.44 percent to settle at USD 108.67 per barrel.
The price increase followed reports that U.S. President Donald Trump and his national security team had discussed a proposal from Tehran to reopen the Strait of Hormuz, conditional upon Washington lifting its blockade and ceasing hostilities. According to White House Press Secretary Karoline Leavitt, the president met with his national security team on Monday morning, though she stopped short of confirming any decision on the proposal. It remains unclear whether the president, who has previously stated that sanctions relief would only be granted once a deal is “100 percent complete”, would view the Iranian offer as a viable pathway toward reducing tensions in the two-month-long conflict.
Oil Price Future Outlook
The Strait of Hormuz, through which approximately one-fifth of the world’s oil and liquefied natural gas transits, remains severely disrupted. Andy Lipow, President of Lipow Oil Associates, estimates that roughly 20 million barrels per day of crude, fuels, and petrochemicals have been affected. Even if hostilities were to cease immediately, Lipow cautioned that a return to normal market conditions would take months, given the need to clear mines, alleviate tanker congestion, and gradually restart production and refining operations.
Accounting for shipping and distribution delays, he projects that it would require at least four to six months for oil markets to stabilize, with prices likely to remain elevated in the interim as inventories approach critical levels. Lipow added that the longer the conflict persists, the higher prices will climb, particularly as stockpiles are drawn down. Should the conflict end abruptly, crude oil prices could drop by an estimated USD 10 per barrel. In the absence of renewed negotiations, he forecasts that WTI crude will drift back toward USD 100 per barrel, with Brent exceeding USD 110.
