Oil Prices Edge Down as Strait of Hormuz Traffic Picks Up After US-Iran Peace Talks

Oil prices edged lower on Tuesday as investors watched for a steady recovery in crude shipments through the Strait of Hormuz following recent US-Iran peace talks.

Brent crude futures slipped 20 cents, or 0.3%, to $77.70 a barrel, while US West Texas Intermediate (WTI) declined by 12 cents, or 0.2%, to $73.74 a barrel by 0323 GMT.

The dip follows a sharp 3% drop on Monday. Markets cooled after the United States granted Iran a 60-day sanctions waiver following initial peace talks, combined with a pause in hostilities in Lebanon under a broader regional agreement.

"The gradual increase in oil flows through the Strait of Hormuz continues to weigh on the market," ING analysts noted.

Ship-tracking data confirmed that two crude tankers carrying nearly 2 million barrels of oil successfully sailed through the strategic choke point on Monday. This marked a significant recovery from Sunday, when traffic slowed due to security fears.

Neil Crosby, head of research at Sparta Commodities, said the spike in recent transits serves as a positive sign for both physical oil supply and diplomatic progress. "It feels like we will be stuck in this bearish, risk-off mood until something changes," he added.

The market remains cautious. The price drops follow a tense weekend that threatened to disrupt the week-old accord, during which US President Donald Trump warned he would resume military actions if Iran disrupted shipping lanes after Tehran briefly declared the gateway closed.

"There remains market skepticism rooted in deep-seated mistrust between Washington and Tehran," said Tim Waterer, chief market analyst at KCM Trade, noting that a full return to pre-conflict prices may be delayed.

Meanwhile, a Reuters poll expects upcoming data to show a drop in US crude, distillate, and gasoline inventories. Earlier government data showed the US Strategic Petroleum Reserve (SPR) fell to 331.2 million barrels last week—its lowest level since June 1983—as supplies tightened during the peak of the US-Iran friction.