Oil Prices Edge Lower as Markets Await Details on Iran Peace Framework and Hormuz Reopening

Oil prices continued to drift lower on Tuesday as traders assessed the uncertain outlook for crude supplies following a preliminary US-Iran agreement aimed at ending the war and reopening the Strait of Hormuz, one of the world’s most critical energy routes.

By 09:31 a.m. Saudi time, Brent crude futures had fallen 45 cents, or 0.5 percent, to $82.72 a barrel, while US West Texas Intermediate slipped 24 cents, or 0.3 percent, to $80.51 a barrel.

The decline followed a sharp drop on Monday, when oil prices slid nearly 5 percent to their lowest close since early March after US President Donald Trump announced that a memorandum of understanding had been signed to end the conflict involving the United States, Israel and Iran. Full details of the agreement have not yet been released.

The war had previously led to the closure of the Strait of Hormuz, a key maritime passageway that typically carries around one-fifth of global oil supply. Its reopening remains central to market expectations.

Early indications suggest the agreement could lead to a phased resumption of shipping through the waterway, alongside a temporary extension of the ceasefire while broader negotiations continue, including discussions on Iran’s nuclear programme.

Iranian President Masoud Pezeshkian described the agreement as an “important step” toward ending hostilities, while cautioning that a final and lasting settlement has yet to be reached.

Market analysts said the absence of concrete implementation details is limiting the scale of price movements, even as sentiment remains broadly negative for crude.

Morgan Stanley analysts said in a note that restoring tanker traffic through the Strait of Hormuz would likely take several weeks. They projected that about 50 percent of disrupted production could return by September, rising to 80 percent by December if conditions stabilise.

However, they also warned that underlying weakness in physical oil markets is persisting. High US exports and weaker demand from China are continuing to weigh on global prices. China’s crude imports fell 29 percent in May to an eight-year low, with further declines expected in shipments from key suppliers such as Saudi Arabia.

Suvro Sarkar, head of energy research at DBS Bank, said the initial phase of the deal appears focused on extending the ceasefire and delaying deeper disputes, while more complex negotiations over nuclear activity and sanctions remain unresolved.

He noted that the second phase—centred on reopening the Strait of Hormuz and easing naval restrictions—will be closely watched by markets. Any lack of coordination in implementation, he warned, could quickly reintroduce volatility into oil prices.

A senior Iranian official has said Tehran would suspend nuclear expansion activities until a final agreement is reached, including halting further uranium enrichment.

For now, traders remain cautious, balancing expectations of improving supply flows against uncertainty over how quickly diplomatic commitments will translate into physical market recovery.