Brent crude edged higher on Tuesday morning, recovering from a three-month low, as traders weighed whether a US-Iran peace framework would quickly translate into normal oil flows through the Strait of Hormuz.
The global benchmark rose about 0.7% to around $83.71 a barrel after tumbling nearly 5% on Monday, when President Donald Trump announced a MoU with Iran to end months of conflict in the Gulf.
The agreement is expected to be formally signed in Geneva on Friday.
US-Iran deal shook markets
Trump’s announcement marked the clearest diplomatic breakthrough since the Gulf conflict disrupted one of the world’s most important energy corridors.
The Strait of Hormuz carries roughly a fifth of global oil supply, making it a pressure point for energy markets, inflation and shipping costs.
The memorandum of understanding is a preliminary agreement that sets out the broad terms of a deal before the final document is signed.
In this case, it is aimed at ending the conflict and restoring safe passage through the strait.
That was enough to jolt the market.
Brent and West Texas Intermediate, the US crude benchmark, both slid to their lowest levels since March on Monday as traders quickly removed part of the “risk premium” built into prices.
In plain terms, that premium is the extra amount buyers pay when they fear supply could be interrupted.
Oil had surged earlier in 2026 as the Hormuz closure forced tankers to wait, reroute or delay shipments.
Monday’s selloff showed that traders now see a lower chance of a prolonged military disruption, but the rebound on Tuesday showed they are not ready to declare the crisis over.
Why did prices bounce back?
Tuesday’s recovery was less about fresh optimism and more about unanswered questions as the market is asking when oil will actually start moving again.
Analysts said the market is likely to continue unwinding the geopolitical risk premium in the near term, potentially pushing oil prices lower than fundamentals alone would justify.
However, they cautioned that uncertainty over when vessels can safely resume transiting the Strait of Hormuz means disruption risks are unlikely to be fully priced out for now.
That caution is rooted in practical realities.
Around 500 commercial vessels remain trapped in the Gulf, according to Kpler, and they cannot all exit through a narrow chokepoint at once.
Mine clearance, naval inspections, insurance approvals and crew safety assessments could slow the process even if diplomats sign the agreement this week.
Shipping companies will also need to decide whether the route is safe enough for captains to resume normal transit. War-risk insurance premiums are unlikely to fall immediately.
Some shipowners may wait for several successful crossings before sending high-value tankers back through the strait.
The deal’s fine print is another source of uncertainty as Iran has pushed for transit fees, while Trump has claimed on Truth Social that passage will be toll-free.
Until that dispute is settled, traders are likely to keep some disruption risk in the price.
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