Global crude oil prices fell sharply on Tuesday as renewed diplomatic efforts between the United States and Iran raised hopes of an agreement that could restore stability to the Middle East and reopen the strategically important Strait of Hormuz.
Brent crude, the global oil benchmark, dropped below $84 per barrel after trading above $100 last week.
Data from Oilprice.com showed Brent falling from about $87 per barrel on Monday to approximately $83.92 on Tuesday. West Texas Intermediate (WTI), the US benchmark, also declined to around $79 per barrel.
The latest fall came as negotiations between Washington and Tehran appeared to gain momentum, reducing fears that the Strait of Hormuz could remain closed for an extended period.
The waterway is one of the world’s most important energy routes, carrying roughly one-fifth of global crude oil supplies.
Oil prices had surged after the United States launched strikes against Iran on February 28 over concerns about Tehran’s nuclear programme.
The military confrontation triggered attacks across the Gulf, disrupted maritime traffic and led to the closure of the Strait of Hormuz, fueling fears of a major global energy supply shock.
The strait was reopened last month after the US and Iran reached a ceasefire agreement.
However, renewed military exchanges subsequently led to another closure, putting additional pressure on global energy markets.
Fresh diplomatic developments on Tuesday, however, offered investors some hope that the strategic waterway could soon reopen.
According to Reuters, Iran proposed a temporary arrangement to Oman that would allow maritime traffic to resume through the strait, with vessels travelling in one direction passing through Iranian waters while part of the opposite route would also cross Iranian territory.
Iranian Deputy Foreign Minister Kazem Gharibabadi said Tehran rejected Oman’s proposal for an equal division of the shipping routes, arguing that it did not adequately address Iran’s security concerns while long-term regional stability remained unresolved.
He warned that the Strait of Hormuz would remain closed if Oman rejected Iran’s proposal, while insisting that Tehran had never recognized the southern shipping route along Oman’s coast.
The possibility of renewed oil shipments through the waterway helped ease market concerns and reversed some of last week’s dramatic price gains.
US President Donald Trump also said negotiations with Iran were progressing well but warned that Washington could resume military action if diplomatic efforts failed.
In an interview with Fox News, Trump said he preferred to avoid further strikes but threatened to target critical Iranian infrastructure, including power plants, bridges and the underground “Kolang Mountain” nuclear facility.
Trump said previous US strikes had significantly weakened Iran’s nuclear programme by targeting facilities in Natanz, Fordow and Isfahan during last year’s conflict.
He warned that the underground facility could also be targeted if negotiations collapse.
For oil markets, the immediate focus remains on whether diplomacy can secure a lasting agreement and restore uninterrupted shipping through the Strait of Hormuz. Any renewed closure or escalation could quickly push crude prices higher again.
