Oil Prices Rebound as Traders Question Diplomatic Breakthrough Narrative

Oil prices rebounded on Tuesday after a sharp decline on Monday, as traders questioned whether the sell-off had priced in a diplomatic breakthrough that may not exist.

The Brent crude price rose 1.3% to $84.89 a barrel, while West Texas Intermediate (WTI) gained 1% to $81.11, recovering part of the previous session's fall.

The sharp decline on Monday followed US President Donald Trump's announcement that he was postponing strikes on Iran and suggesting talks could reopen the Strait of Hormuz.

Tehran challenged this account, saying it was not negotiating with Washington and had scheduled no meetings. Another vessel was struck near the strait, adding to doubts that supply risks were disappearing.

Nikos Tzabouras of Tradu told The Wall Street Journal that earlier negotiations between the US and Iran had failed to deliver a comprehensive agreement, and another diplomatic setback could revive hostilities and oil's geopolitical premium.