Oil prices moved lower on Tuesday, extending losses from the previous session as traders focused on signs that crude shipments through the Strait of Hormuz may gradually return toward normal levels. The decline reflects a shift in market sentiment following early progress in U.S.-Iran peace discussions, which have reduced immediate fears of a prolonged disruption to one of the world’s most important energy corridors. While geopolitical tensions remain elevated, investors are increasingly assessing whether the worst of the recent supply shock may already be behind the market.

Peace Negotiations Ease Supply Concerns

Brent crude futures fell approximately 0.6% to $77.47 per barrel, while West Texas Intermediate declined 0.4% to $73.54. The weakness follows a sharp selloff earlier in the week after the United States granted Iran a 60-day sanctions waiver and diplomatic negotiations gained momentum. Market participants interpreted the developments as a potential pathway toward restoring oil exports and reducing supply constraints that have dominated energy markets for months.

The Strait of Hormuz remains the focal point for traders. The strategic waterway handles roughly one-fifth of global oil and liquefied natural gas shipments. Although Iran recently reiterated threats to restrict traffic through the strait, shipping data showed tankers successfully navigating the route on Monday, providing reassurance that commercial flows are beginning to recover. The return of shipping activity has significantly reduced the risk premium embedded in crude prices during the height of the conflict.

Global Supply Outlook Continues to Improve

Beyond Iran, the broader supply picture is becoming increasingly favorable for oil consumers. Market analysts note that additional barrels from Iran, Russia, and Venezuela could become more accessible under evolving geopolitical conditions. This potential increase in available supply comes as many countries seek to replenish strategic reserves that were heavily depleted during the recent energy crisis.

Iraq has already responded by increasing output from its southern oilfields to approximately 2.1 million barrels per day, while additional tankers line up at Gulf export terminals. These developments suggest that producers are preparing to capitalize on improved market access and stabilize supply chains disrupted by months of conflict.

At the same time, Rabobank lowered its oil price forecasts, now expecting Brent crude to average $79 per barrel during the third quarter and $78 during the fourth quarter. The revised outlook reflects growing confidence that major supply disruptions can be avoided if diplomatic progress continues.

Risks Remain Despite Improving Market Conditions

Despite the improving outlook, energy markets remain vulnerable to setbacks. Shipping companies continue to face concerns over maritime safety, including potential mines, damaged infrastructure, and congestion in key transit routes. Industry experts caution that a full normalization of tanker traffic will require stronger security guarantees and greater confidence among ship operators.

Meanwhile, U.S. crude inventories remain historically low, with the Strategic Petroleum Reserve recently falling to its lowest level since 1983. This leaves less room for policymakers to respond to future supply shocks should negotiations deteriorate unexpectedly.

Looking ahead, investors will closely monitor developments in U.S.-Iran negotiations, shipping activity through the Strait of Hormuz, and inventory data from major consuming nations. While oil prices appear to be transitioning from crisis-driven volatility toward greater stability, the energy market remains highly sensitive to geopolitical headlines. Any disruption to the fragile diplomatic process could quickly reverse recent declines and reignite upward pressure across global energy markets.