(Bloomberg) — Oil held the bulk of a three-day decline on optimism that the US and Iran may be able to forge a diplomatic solution to end the war in the Middle East, with the conflict now in its sixth month.
West Texas Intermediate rose above $80 a barrel after tumbling 14% over the past three sessions. Brent closed near $84 on Tuesday. In Washington, President Donald Trump met with Israeli Prime Minister Benjamin Netanyahu, as the US leader sought to avoid renewed bombing in Iran.
Israel — which launched the war alongside the US in February — signaled it favored pursuing talks. After the meeting, an Israeli spokesman said all parties preferred the “easy way,” a negotiated settlement, over the “hard way,” military action, to stop Tehran developing a nuclear weapon.
Oil prices have been whipsawed this month, initially surging as hostilities between the US and Iran re-escalated and the conflict spread to the Red Sea, before giving back some of the gains as tensions eased. Attention remains focused on flows of crude, with traffic through the Strait of Hormuz still constrained.
In the region, tensions and signs of fighting remain. Saudi Arabian air defenses intercepted drones targeting oil facilities in the Eastern Region, the Defense Ministry said in a post on X. Militias affiliated with Iran launched the attack from Iraqi territories, it said.
On the diplomatic front, Iran told Oman that its proposal for a route through Hormuz, with 50% under Tehran’s control and 50% under Oman’s, would not address the Islamic Republic’s concerns. The inbound route must be entirely under Iran’s control, along with part of the outbound route, Deputy Foreign Minister Kazem Gharibabadi told state television.
“There is room for the short end of the curve to fall,” said Rob Thummel, senior portfolio manager at Tortoise Capital Advisors LLC, referring to crude futures’ nearer contract months. “But the back end of the curve likely moves higher unless some diplomatic solution is reached.”
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