Oil prices declined on Tuesday, reversing most of the previous session’s gains, after Iran and Israel indicated a pause in direct attacks following a call from US President Donald Trump.
Despite the development, both sides cautioned that hostilities could resume, keeping geopolitical risks elevated.
Brent crude futures fell 91 cents (1%) to $93.34 per barrel at 0400 GMT, while US West Texas Intermediate (WTI) dropped $1.13 (1.2%) to $90.17 per barrel.
Crude prices had previously surged by as much as 5% after renewed Israeli strikes on Iran and escalating violence in Lebanon raised fears of a broader regional conflict. However, gains eased after Iran announced the end of its latest military operations against Israel.
Market participants said sentiment remains fragile, with investors unconvinced that the latest pause will hold.
“While there is some relief from the latest pause in direct strikes, investors are not convinced the truce will hold,” said Tim Waterer, chief market analyst at KCM Trade.
Read More: Iran fires missiles at Israel; Oil prices surge
Iran and Israel both confirmed a halt in attacks following Trump’s appeal to immediately stop hostilities. However, Tehran warned it could resume operations if Israel continues strikes against Hezbollah in Lebanon, while Israeli Prime Minister Benjamin Netanyahu said Israel would respond forcefully to any further Iranian attack.
US President Donald Trump, in an interview with Axios, said he had cautioned Netanyahu that continued escalation could leave Israel isolated if the conflict expanded further.
Analysts warned that despite temporary de-escalation signals, the broader geopolitical outlook remains unstable, with no clear path toward a sustained peace agreement.
“The key question is whether current de-escalation efforts can finally translate into a longer-lasting resolution, or if we’re simply in another temporary lull,” Waterer added.
Attention is also centered on negotiations over the Strait of Hormuz, a vital global shipping route through which nearly one-fifth of global oil flows. The waterway has remained under pressure amid ongoing tensions following earlier US and Israeli strikes on Iran.
Adding further complexity, the US military recently reported disabling an unladen oil tanker in the Gulf of Oman after it allegedly attempted to sail toward an Iranian port in violation of restrictions, underscoring persistent friction in the region despite diplomatic efforts.
