Brent crude, the international benchmark, fell 0.4% to $88.87 a barrel, while US West Texas Intermediate remained steady at $82.47. Both prices stayed near the levels reached the previous day, when Brent moved above $90 a barrel for the first time in more than a month.
The small decline followed reports of mediation efforts aimed at pausing the conflict between Washington and Tehran. According to Reuters, Iran had received a proposal from mediators for a 10-day ceasefire as part of efforts to preserve an interim agreement signed on June 17 to end the US-Israeli war on Iran, which began on February 28.
Despite the diplomatic attempts, the conflict continued. The United States carried out airstrikes for the 10th consecutive night after President Donald Trump warned that Tehran would “pay” for the killing of American soldiers in Jordan. Iran responded with attacks on Kuwait.
Yemen Announces Restrictions on Saudi-Linked Shipping
The oil market faced another source of pressure after the Houthi government in Yemen announced a ban on shipping connected to Saudi Arabia. The measure targeted a route used by the kingdom to transport millions of barrels of crude through a pipeline that crosses the country and avoids the Strait of Hormuz.
Saudi Arabia said it would take all necessary measures to protect its vessels. The pipeline is among the limited options available for Gulf oil exports that do not require passage through Hormuz, the narrow waterway between Iran and Oman.
The Strait of Hormuz normally carries around one-fifth of global oil supplies. With both the strait and alternative routes facing security concerns, traders monitored the possibility of further disruptions.
“The threats of a naval blockade on Saudi Arabia by the Houthis are significant because they raise the risk of disruption to another major oil exporter,” Tim Waterer, chief market analyst at KCM Trade, told Reuters, as reported by The Independent.
Tanker Attack Adds To Shipping Concerns
Shipping activity around Hormuz continued to face security incidents. A tanker was hit by a projectile northeast of Limah, off the coast of Oman, early on Tuesday, according to the UK Maritime Trade Operations agency, which cited multiple reports. The identity of the vessel was not released.
The latest incident came as vessels operating near major energy routes faced growing risks linked to the conflict. The developments added pressure to oil markets already reacting to uncertainty around regional supply flows.
The US-Israeli war against Iran has created one of the most disruptive situations for oil supplies in recent years. Prices briefly returned to levels seen before the conflict after the United States and Iran signed an interim agreement to stop the fighting, before renewed strikes pushed prices higher again.
Brent crude had traded above $100 a barrel in March during the height of the war, reaching its highest level since 2022.
Ceasefire Discussions Limit Further Price Gains
Oil prices remained supported by supply concerns, although reports of possible diplomatic progress limited the market reaction. According to IG market analyst Tony Sycamore, discussions about de-escalation and peace talks were helping contain further increases in the short term.
“Oil has come a long way already and it certainly has the potential to go higher again. However, in the short term the overnight talk of de-escalation and peace talks appears to be capping the upside for the time being,” Sycamore said in a note.
The outcome of the ceasefire discussions remained uncertain as military operations continued. Markets continued to track developments around Iran, the Red Sea and the Strait of Hormuz as traders assessed the impact on global oil shipments.
