Oil prices reversed their early gains on Tuesday as traders weighed renewed diplomatic efforts to end the US-Iran conflict against fresh threats to energy infrastructure in Russia.
Brent crude futures had climbed as much as 2% intraday to around $105.66 a barrel, while US West Texas Intermediate (WTI) approached $97.
However, both benchmarks surrendered their advances later in the session, with Brent retreating toward $103 and WTI slipping into the mid-$95 range.
The volatility followed Monday’s sharp sell-off, when Brent plunged 7.63% to settle at $104.77 a barrel and WTI dropped 7.36% to $96.46.
The declines came after signs of diplomatic progress between Washington and Tehran raised hopes of easing supply disruptions in the Middle East.
Trump gives Iran diplomacy more time
A key factor influencing oil markets has been President Donald Trump’s reported preference for pursuing diplomacy with Iran rather than immediately resuming military operations.
Tuesday’s reversal came soon after Trump said the US would end billions of dollars of annual military support to Israel.
“Now, as far as paying Israel, Bibi Netanyahu and I have made a deal that we give Israel $4 billion a year, and we made a deal months ago that we’re stopping,” Trump told Fox News.
“We’ve already agreed that by the end of this year we won’t be paying Israel.”
Meanwhile, diplomatic efforts are being facilitated by Qatar, with mediators traveling to Tehran to meet Iranian Foreign Minister Abbas Araghchi.
A draft agreement aimed at restarting negotiations has reportedly been under discussion, although the two sides remain far from a final settlement.
Iran has said it is willing to pursue dialogue but wants Washington to accept its conditions, including those relating to the Strait of Hormuz.
Ukraine strike raises fresh supply concerns
ffsetting some of the optimism around Middle East diplomacy, Ukraine launched a large drone attack on the Slavneft-Yanos oil refinery in Russia’s Yaroslavl region overnight.
Regional Governor Mikhail Yevrayev said the attack damaged refinery infrastructure and injured two employees.
The refinery is one of Russia’s major fuel-processing facilities and has a capacity to process approximately 15 million metric tons of crude annually.
The attack adds another supply-side concern for oil markets at a time when disruptions in the Middle East have already tightened global energy availability.
Earlier in the day, oil had climbed on reports that the United States launched attacks on Iran’s Qeshm Island as part of a series of limited strikes that Washington has carried out in the past few weeks.
Iran has also made it clear that it will retaliate harshly even as it remains open to a diplomatic resolution.
The next few days are likely to be key for both benchmarks as Trump weighs major strikes on Iranian targets with the midterm elections ending Tuesday.
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