Oil slips as US–Iran tensions keep supply concerns in focus

Oil prices edged lower Tuesday as traders assessed potential supply risks linked to rising tensions between the United States and Iran, particularly around the strategically vital Strait of Hormuz.

By early trading, Brent crude futures fell 18 cents, or 0.26 percent, to $68.85 a barrel, while US West Texas Intermediate declined 21 cents, or 0.33 percent, to $64.15. The slight drop followed a more than one percent rise a day earlier after Washington issued fresh maritime guidance for vessels operating near Iranian waters.

The US Department of Transportation’s Maritime Administration advised American-flagged commercial ships to avoid Iran’s territorial waters and to refuse boarding requests from Iranian forces, a move that renewed fears of potential disruptions in one of the world’s most critical oil chokepoints.

Roughly 20 percent of global oil consumption flows through the Strait of Hormuz, which serves as a key export route for major producers including Iran, Saudi Arabia, the United Arab Emirates, Kuwait and Iraq, with much of the crude destined for Asian markets.

Despite cautious optimism following recent Oman-mediated nuclear talks between Washington and Tehran, analysts say lingering geopolitical risks continue to support a modest risk premium in oil prices, as concerns remain over possible sanctions, escalation or shipping disruptions.

Meanwhile, geopolitical developments elsewhere added to market uncertainty. The European Union is considering expanding sanctions on Russian oil by targeting ports in third countries such as Georgia and Indonesia that facilitate shipments, as part of broader efforts to curb Moscow’s revenue from energy exports amid the Ukraine war.

In Asia, Indian Oil Corp reportedly secured six million barrels of crude from West Africa and the Middle East as India continues to diversify its supplies and reduce dependence on Russian oil while pursuing closer trade ties with the United States.