Crude oil fell below $90 a barrel Tuesday, surrendering most of the previous session’s gains, as Iran and Israel agreed to halt attacks against each other and revived hopes that peace negotiations can move forward. Brent slipped below $93. The retreat completed a round-trip that began with the weekend’s exchange of strikes and ended with the de-escalation traders had been waiting for.
The price path traced the escalation hour by hour. WTI spiked to $95 early Monday and Brent crossed $98 in Asian trading after the weekend exchanges breached the fragile ceasefire. Prices then eased through Monday — WTI to $91, Brent to $94 — after Iran stated it had ended its military operations against Israel and Israel signaled it would hold fire. Tuesday’s mutual halt in attacks pulled both benchmarks below their pre-spike levels.
President Trump urged both sides to de-escalate, said talks with Tehran are continuing, and added that both countries are close to a new ceasefire — comments that eased concerns the escalation would hamper negotiations to gradually restore oil exports through the Persian Gulf. He also repeated his view that oil prices should ease once the conflict ends.
Supply-side developments reinforced the softer tone. OPEC+ approved another increase in July oil production quotas of 188,000 barrels per day despite persistent supply risks from Middle East tensions. Fresh data showed an aggressive pullback in Chinese crude imports, with the world’s top importer continuing to lean on inventories rather than overseas supply — a demand-side counterweight that helped cap the weekend spike. The Strait of Hormuz nonetheless remains effectively closed under the dual U.S.-Iran blockade, keeping physical flows throttled.
Fitch Ratings framed the disruption as temporary. The agency said the Hormuz closure is a logistical shock that has not changed the long-term fundamentals of the crude market, projected the strait could reopen around the end of July, and sees Brent averaging $87 for full-year 2026. It also warned that rapid Middle East capacity recovery, strong non-OPEC supply growth, and a potentially more aggressive OPEC+ policy could recreate an oversupply by the fourth quarter of 2026, with prices expected to pull back once the strait reopens — while cautioning that the reopening timing remains highly uncertain.
The EIA’s June Short-Term Energy Outlook, released Tuesday, added the official forecast layer: the agency sees the largest fuel-price impacts landing in the second quarter of 2026 from the Hormuz closure, particularly for diesel and jet fuel, before prices ease through 2027. Between the de-escalation, the OPEC+ barrels, the soft Chinese demand, and the reopening forecasts, the market’s center of gravity has shifted back toward the bearish side of the two-sided risk that has defined this conflict’s pricing since May.
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