Oil Prices Mixed as Iran Strikes and Diplomacy Pull Markets in Opposite Directions

CNBC reported Tuesday that oil markets opened the session sharply divided, with Iran strikes oil prices moving in conflicting directions as traders struggled to read Washington’s intentions in the Middle East.

July Brent crude futures climbed 1.6% to $97.72 a barrel in Asian trading. U.S. West Texas Intermediate futures, however, dropped 5.4% to $91.38 per barrel, reflecting the deep uncertainty gripping energy markets.

U.S. Military Action Adds New Pressure

American forces conducted operations in southern Iran on Monday, striking vessels allegedly attempting to lay sea mines and targeting missile launch infrastructure. U.S. Central Command described the operations as defensive measures to safeguard American troops from Iranian military threats. The strikes immediately clouded optimism over ongoing diplomatic talks between Washington and Tehran.

Also Read: What Happens to Oil Markets When the Strait of Hormuz Closes?

Trump Sends Contradictory Signals

President Donald Trump complicated the picture further with a social media post on Monday. He said talks with Iran were advancing well, but made clear any deal had to be comprehensive. His exact framing left room for resumed military action if negotiations collapsed. Trump also separately urged Saudi Arabia, Qatar, Pakistan, Turkey, Egypt and Jordan to join the Abraham Accords, a move analysts view as an attempt to reshape the broader regional order while Iran talks proceed.

The dual messaging left traders uncertain whether a diplomatic resolution was genuinely within reach or whether fresh escalation remained possible.

A Market Already Under Severe Supply Stress

The latest volatility arrives as global oil supply was already under significant strain before Monday’s strikes. Swiss banking giant UBS warned Friday that oil inventories had declined sharply, with combined drawdowns of 246 million barrels recorded across March and April alone. The bank estimated cumulative production losses could surpass one billion barrels by the end of May, calling the market “strongly undersupplied.”

Also Read: UBS Warns of Mounting Global Oil Supply Strain Amid Hormuz Disruptions

Analysts noted that even tanker-stored crude was rising, but largely because U.S. exports were being rerouted to Asian buyers rather than flowing through traditional channels. On-land stockpiles of both crude and refined products continued to fall.

What Traders Are Watching Next

With Hormuz shipping disruptions ongoing and no ceasefire in sight, the divergence between Brent and WTI reflects differing regional exposure to supply risk. Brent, tied more closely to Middle East flows, drew buyers. WTI, more domestically anchored, sold off on demand uncertainty. Any breakthrough, or breakdown, in U.S.-Iran talks this week could swing both benchmarks sharply.

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