-- Oil traded lower early on Tuesday with the ceasefire between the United States and Iran seen holding, calming Monday's gains as violence in the Persian Gulf eased.
West Texas Intermediate crude oil for June delivery was last seen down US$3.48 to US$102.94 per barrel, after rising 4.4% on Monday, while July Brent oil was down US$1.85 to US$112.59.
Hostilities in the Iran war picked up on Monday as Iran attacked the United Arab Emirates' Fujairah oil port on the Gulf of Oman, which had been continuing to export oil since the Feb. 28 start to the war, even as Persian Gulf supply remains trapped behind the Strait of Hormuz. It also fired on U.S. warships, claiming to have struck one naval vessel with two missiles, which was denied by the U.S. military.
The United States responded by attacks on Iranian fast boats while President Trump said the United States will begin guiding ships through the Strait. Reuters reported the Alliance Fairfax, a U.S.-flagged vehicle carrier, transited the Strait on Monday accompanied by the U.S. military.
Still, despite the strikes, reports said U.S. Defense Secretary Pete Hegseth, speaking at a Tuesday morning press conference, said the ceasefire remains in effect while promising to continue to press to open the Strait of Hormuz.
Still, the war has produced the largest-ever oil supply shock as the closure of the Strait blocked exports from the Persian Gulf, which supplied 20% of daily oil demand, keeping oil prices near four-year highs, with any relief unlikely until a peace deal is reached despite U.S. efforts to reopen the waterway.
"Despite US plans to restore shipping, security risks may keep the route closed until a US-Iran deal, sustaining concern over energy prices," Saxo Bank wrote.