Oil Prices Plummet as Hopes for US-Iran Conflict Resolution Grow

Oil prices continued their downward trend on Tuesday, hitting their lowest levels in over a week as hopes for a resolution to the US-Iran conflict grew.

Brent crude futures fell $1.75 (1.98%) to $86.61 per barrel, while US West Texas Intermediate crude dropped to $81.35 a barrel ($1.26 or 1.53% lower).

The market's optimism is based on new talks between Oman and Iran over a joint regional mechanism to manage the Strait of Hormuz, one of the world's most important oil shipping chokepoints.

However, analysts warned that supply disruptions remain a risk, particularly in the Red Sea, where Saudi Arabia has come under attack from Iranian-backed armed groups.

Goldman Sachs expects Brent to moderate to $80 by year-end if Hormuz fully reopens, but warns of new upside risks for crude and refined products prices due to potential Red Sea disruptions.