Oil ticks up after selloff as talks to end US-Iran war remain uncertain

Oil prices experienced a modest rebound on Tuesday, recovering slightly from a significant plunge in the prior session. The market remains apprehensive about the stability of Middle Eastern supply routes, as a diplomatic resolution to the U.S.-Iran conflict, which has disrupted vital shipping lanes, continues to seem distant.

Front-month Brent futures rose by $0.62, or 0.7 percent, to $84.39 a barrel. This followed a 7 percent drop in the previous session, which saw prices hit a three-week low. U.S. West Texas Intermediate (WTI) crude also saw a similar uptick, gaining $0.61, or 0.7 percent, to trade at $80.95, after falling over 5 percent to its lowest in nearly a week.

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Some of the sting has been taken out of oil prices ... with Trump pausing strikes on Iran and touting a return to negotiations (though) the move lower remains fragile - oil could just as easily rebound higher if missiles start flying again or if tankers around the Strait of Hormuz come under fire once more.

The recent price dip was partly attributed to U.S. President Donald Trump's announcement on Sunday that he was pausing new attacks on Iran, citing ongoing talks to end their conflict and settle claims over the Strait of Hormuz. This waterway is crucial, as approximately 20 percent of global energy exports transited through it daily before the conflict. However, Iran's Foreign Ministry spokesman Esmail Baghaei rejected Trump's claims on Monday, stating that no negotiations with the U.S. were underway and no meetings were scheduled.

Adding to the market's unease, the UK Maritime Trade Operations reported an incident on Tuesday. A cargo vessel broadcasted over VHF channel 16 that it had been struck by an unknown projectile approximately 20 nautical miles northeast of Al Khasab, Oman. This report, currently under investigation, underscores the persistent risks faced by vessels operating in the region, contributing to the geopolitical premium that continues to influence oil prices.

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A cargo vessel has broadcasted on VHF 16 that they have been hit by an unknown projectile.