Oil Prices Plummet Amid Signs of Easing US-Iran Tensions

WTI crude oil prices closed sharply lower on Tuesday, extending a two-day decline as signs of improving Middle East shipping flows and potential US-Iran negotiations outweighed supply disruption risks.

The price drop accelerated after reports suggested the US State Department was preparing to return diplomats to Middle Eastern embassies evacuated before and during the conflict. This reduced some of the geopolitical risk premium that had supported crude prices.

Iran and Oman reportedly agreed on a shipping lane and a joint project to clear mines, while navigation through the Strait of Hormuz could gradually normalize. Russian state-owned media separately reported an alleged Iran-US ceasefire agreement involving free navigation through the strategic waterway.