Oil Prices Slide as Strait of Hormuz Attacks Threaten U.S.-Iran Ceasefire

Oil prices pulled back sharply on Tuesday after fresh military exchanges in the Strait of Hormuz cast serious doubt over a fragile ceasefire between the United States and Iran, CNBC reported.

International benchmark Brent crude slid roughly 1.6% to near $112.67 a barrel. U.S. West Texas Intermediate dropped around 2.2% to trade near $104.05. Both contracts had surged Monday, with Brent gaining 6% and WTI rising 4%.

Ceasefire Frays After Drone and Missile Strikes

The pullback came after Iranian drones and missiles struck the United Arab Emirates. Washington said it had sunk Iranian naval vessels in the Strait of Hormuz. The corridor handles a significant share of global seaborne oil traffic.

U.S. President Donald Trump threatened on Fox News that Iran would face total destruction if it continued targeting American ships protecting commercial routes through the strait. Iranian Foreign Minister Abbas Araghchi pushed back, writing on social media that military action cannot resolve what he described as a political crisis.

Araghchi also warned Washington against being pulled back into conflict by outside actors, and cautioned the UAE similarly. He noted that diplomatic talks were continuing with Pakistan’s help.

What Analysts Are Saying

Strategists at Dutch bank ING described the latest exchanges as early evidence of the ceasefire breaking apart. Analysts Warren Patterson and Ewa Manthey noted in a research note that Trump’s suggestion the conflict could drag on for another two to three weeks offered markets only limited comfort. They said markets would likely greet such timelines with skepticism given repeated prior extensions since hostilities began.

Background: Supply Buffers and Shortage Risks

Global oil inventories are not yet at crisis levels, but they are eroding faster than comfortable. Goldman Sachs warned Monday that refined product buffers are being drawn down at an accelerating pace. Jet fuel, naphtha, and liquefied petroleum gas are all tightening. The bank estimated total global stocks at roughly 101 days of demand but projected a drop to 98 days by the end of May.

Goldman flagged South Africa, India, Thailand, and Taiwan as facing heightened risks of localized product scarcity. Regional supply constraints, rather than aggregate shortfalls, pose the sharpest near-term threat.

Chevron CEO Warns of Fuel Access Problem

Chevron chief executive Mike Wirth amplified those concerns Monday at the Milken Institute Global Conference. Speaking with CNBC’s David Faber, Wirth said the core issue for some regions is no longer affordability alone. Availability of fuel itself is becoming the more pressing question, he argued, predicting visible supply effects emerging over the coming weeks.

Iraq, an OPEC member, is reportedly offering buyers steep discounts on crude loaded this month. However, tankers must be willing to transit the Strait of Hormuz to take delivery.

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