Oil prices rebounded on Tuesday after a sharp fall the previous session, supported by tempered optimism over U.S.-Iran peace talks and signs of progress in restoring crude flows through the Strait of Hormuz. Brent crude futures gained 24 cents, or 0.38%, to $78.15 a barrel, while U.S. West Texas Intermediate (WTI) rose 33 cents, or 0.46%, to $74.19 a barrel.
The U.S. Treasury granted Iran a 60-day sanctions waiver on Monday, allowing the production, delivery, and sale of Iranian crude oil. The waiver expires on August 21 and permits the importation of Iranian oil to the U.S., with payments made in dollars. Prices had fallen more than 3% on Monday after the announcement, as investors weighed the implications of the waiver and a lull in hostilities in Lebanon under a broader agreement.
Ship traffic through the Strait of Hormuz began to recover over the weekend, though volumes remain significantly below pre-war levels. Ship-tracking data showed two crude tankers carrying nearly 2 million barrels of oil sailed through the strait on Monday, a sign of increasing activity following weaker flows on Sunday.
Market analysts remain cautious, noting deep-seated mistrust between Washington and Tehran. Tim Waterer, chief market analyst at KCM Trade, said, "Any return to pre-war oil prices is likely to be delayed rather than immediate." U.S. President Donald Trump stated that Iran would agree to weapons inspections to ensure "nuclear honesty," adding that he would take action if Iran failed to comply.
The U.S. and Iran concluded their first round of talks in Switzerland on Monday, with Iran securing waivers for oil and petrochemical exports, the release of some frozen assets, and the launch of a reconstruction plan. Iranian Foreign Minister Abbas Araqchi confirmed these developments, which could allow nearly 1.5 million barrels per day of Iranian crude to return to international markets.
Oil prices remain roughly 30% above pre-conflict levels, with analysts noting that any collapse in peace talks could quickly reverse the market's recent relief. The Federal Reserve has been closely monitoring energy prices, as inflation expectations have been a dominant market concern.
Other key commodities are also returning to pre-war levels, with urea prices among those showing signs of stabilization. However, the situation remains fluid, with ongoing negotiations and potential disruptions in the broader region.