Global oil prices remained elevated on Tuesday as investors closely monitored expected diplomatic engagements between the United States and Iran, with uncertainty over the future of the Strait of Hormuz continuing to influence market sentiment. Brent crude for September delivery traded above $73 per barrel after gaining 1.8 per cent in the previous session, while West Texas Intermediate (WTI) crude hovered near $70 per barrel. Although prices have eased significantly from the highs recorded during the recent US-Iran conflict, traders remain cautious amid geopolitical developments in the Middle East.

Market attention has shifted to Doha, where discussions involving the United States and Iran are expected to take place. However, uncertainty persists over the nature of the engagement. While Washington has maintained that negotiations are set to proceed, Iran's foreign ministry has said it will send only a delegation of technical experts and ruled out direct talks with US officials. The differing positions have raised questions about the prospects of achieving a broader diplomatic breakthrough and reducing tensions in the region.

Oil markets also reacted to fresh comments from Iranian Deputy Foreign Minister Kazem Gharibabadi, who indicated that Tehran intends to play a greater role in managing shipping through the Strait of Hormuz if Oman does not continue joint oversight of the strategic waterway. The Strait of Hormuz is one of the world's most important maritime energy corridors, with a substantial share of global crude oil exports passing through it every day. Any disruption to shipping or changes in transit regulations have the potential to affect global energy supplies and oil prices.

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Under the current interim arrangement, Iran has agreed not to impose transit fees on vessels using the Strait of Hormuz for a period of 60 days. However, the agreement leaves open the possibility of such charges being introduced later, a proposal that has drawn opposition from the United States, European countries and Gulf Arab nations. Shipping activity through the strait slowed over the weekend after two vessels were attacked near the waterway during renewed hostilities. However, tanker traffic has gradually resumed, suggesting that shipping companies are regaining confidence in the route despite ongoing security concerns.

Despite lingering geopolitical risks, oil prices have largely retraced the sharp gains recorded during the conflict as fears of prolonged supply disruptions have eased. Brent crude is now trading close to levels seen before the outbreak of hostilities, reflecting market expectations that energy flows through the Strait of Hormuz will remain largely uninterrupted. Analysts have also pointed to improving supply conditions outside the region.

Morgan Stanley recently lowered its forecast for Dated Brent, citing the faster-than-expected normalisation of shipping through the Strait of Hormuz, resilient crude exports from the United States and relatively weak demand from China. These factors have reinforced expectations that global oil supplies will remain adequate, limiting the potential for sustained price spikes unless geopolitical tensions escalate further.

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