-- Crude oil futures settled lower in after-hours trading on Tuesday, as the US-Iran ceasefire held despite skirmishes in the Strait of Hormuz and strikes on the UAE.
Front-month West Texas Intermediate crude futures dropped by 3.51% to $102.68 per barrel, while Brent futures fell by 3.58% to $110.35/bbl.
"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 strategists said in a note on Tuesday.
The latest data from the American Petroleum Institute showed on Tuesday that US crude oil inventories decreased by 8.1 million barrels in the week ended May 1, following a 1.79-mmbbl draw the previous week.
The oil market now awaits the US Energy Information Administration's petroleum inventory report, scheduled for release on Wednesday.
On Tuesday, the US said it had drafted a UN Security Council resolution to safeguard freedom of navigation in the Hormuz, accusing Iran of threatening global shipping through attacks, mining activity and attempts to impose tolls on commercial vessels.
"We're asking the UN to call on Iran to stop blowing up ships, remove the mines, and allow humanitarian relief. If the international community can't rally behind this and solve something so straightforward, then I don't know what the utility of the UN system is," said US Secretary of State Marco Rubio.
The UAE's Defense Ministry said on Tuesday that its air defenses were dealing with missile and drone attacks from Iran after four weeks of relative calm since President Trump announced a ceasefire.
The second day of attacks on the UAE came after Iran's Revolutionary Guards Navy issued a map it said was expanding the areas under Tehran's control near the Strait to include the UAE's ports of Fujairah and Khorfakkan, as well as the coast of the UAE's emirate of Umm Al Quwain.
US Defence Secretary Pete Hegseth said the operation to protect commercial ships was temporary and that the four-week-old truce was not over.
"We're not looking for a fight", Hegseth said at a press conference on Tuesday. "Right now the ceasefire certainly holds, but we're going to be watching very, very closely".
Hegseth said the US had secured a path through the Hormuz and that hundreds of commercial ships were lining up to pass through. Danish shipping giant Maersk reportedly said one of its commercial vessels successfully transited the Strait under US military protection.
"US forces said they repelled Iranian attacks while escorting two US-flagged ships, and the UAE reported intercepting missiles and a fire at its Fujairah oil terminal," Saxo Bank strategists said in a note Tuesday.