Oil climbed modestly in Asian trading on Tuesday following a steep decline the previous session that sent prices to levels not seen in three months. Market participants are waiting for further detail on a U.S.-Iran agreement that is expected to permit a reopening of the Strait of Hormuz.
At 20:08 ET (00:08 GMT), Brent oil futures for August delivery rose 0.7% to $83.71 a barrel. U.S. West Texas Intermediate crude futures for July delivery advanced 0.9% to $81.44 a barrel.
Both contracts had plunged nearly 5% on Monday after U.S. President Donald Trump announced a memorandum of understanding with Iran intended to end months of conflict and to restore shipping through the Strait of Hormuz. The sharp selloff removed a substantial portion of the geopolitical risk premium that had built up during the Gulf conflict, leaving Brent and WTI to settle at their lowest closing levels since March.
With prices having adjusted to the announcement, attention has shifted to the timetable for implementing the accord and the speed at which oil exports can be returned to normal service. Market actors are watching the formalities closely: U.S. and Iranian officials are scheduled to attend a signing ceremony in Geneva on Friday.
Analysts cautioned that, despite the generally positive market response to the deal, considerable uncertainty persists. The agreement has raised expectations that disrupted energy flows could resume, but lingering questions remain about maritime security arrangements, the impact on insurance costs for vessels in the region, and how quickly ships that were sidelined can be redeployed.
Several institutions warned that reconstituting inventories and stabilizing shipping routes may not be immediate. Restoring pre-disruption stock levels and bringing shipping back to normal operating patterns could take weeks or even months, they said.
Contributing to the bearish backdrop, OPEC last week trimmed its forecast for global oil demand growth in 2026 for the second month running. The producer group now projects demand to expand by about 970,000 barrels per day next year, down from a prior estimate of 1.17 million barrels per day.
Inventories were drawn down substantially while the Strait was effectively closed, and observers note that any setbacks in talks or delays in reopening shipping lanes could quickly bring supply concerns and renewed volatility back to energy markets.
Context and market focus
With benchmarks having already reacted to the announcement, traders are parsing implementation details and logistical constraints that will determine whether the reduction in geopolitical risk is sustained. The industry implications span energy traders, shipping operators and insurers who will all be affected by the speed of normalization.
For now, modest price gains in Asian trade reflect a market seeking confirmation that the memorandum of understanding will translate into tangible improvements in crude flows through a strategically vital chokepoint.