Oil markets were unsettled on Tuesday as investors weighed fresh U.S. military action in southern Iran against signs that Washington still wants to keep negotiations with Tehran alive.
Brent crude, the global benchmark, rose 1.6% in Asian trading to $97.72 a barrel for July delivery, while U.S. West Texas Intermediate futures for June fell 5.4% to $91.38. The different moves underlined the uncertainty facing traders, with some pricing in the risk of further disruption in the Gulf and others responding to the possibility that diplomacy could prevent a wider conflict.
The latest shift in sentiment came after the U.S. military said it “conducted self-defense strikes in southern Iran today.” The operation targeted vessels that were allegedly preparing to deploy mines, along with missile launch sites. U.S. Central Command said the strikes were carried out “to protect our troops from threats posed by Iranian forces.”
The Gulf remains a key focus for energy markets because of its role in global oil and gas flows. Any escalation near major shipping lanes, particularly around the Strait of Hormuz, can quickly raise concerns about supply delays, higher insurance costs, and tighter availability for refiners in Asia and Europe. Even without a full closure, threats to tanker movement can add a risk premium to crude prices.
The military action has also complicated the political backdrop. President Donald Trump said on Monday that he had urged Saudi Arabia, Qatar, Pakistan, Turkey, Egypt, and Jordan to join the Abraham Accords, the U.S.-backed initiative aimed at normalising relations between Israel and Arab nations.
Trump also said talks with Iran were “proceeding nicely,” but warned that the U.S. could return to military action if negotiations failed. “It will only be a Great Deal for all or, no Deal at all,” Trump wrote.
Supply pressures are adding to the market’s unease. UBS said global oil inventories fell by 246 million barrels across March and April, while cumulative production losses could exceed 1 billion barrels by the end of May if disruptions persist.
The bank described the market as “strongly undersupplied,” pointing to lower onshore crude and refined fuel inventories, even as more oil remains stored on tankers because of rerouted U.S. exports to Asia.