US-Iran peace deal: Oil prices rebounded on Tuesday after suffering a sharp decline in the previous session, supported by cautious optimism over ongoing US-Iran peace talks. Market participants also continued to monitor developments surrounding the potential resumption of crude oil flows through the Strait of Hormuz.

Brent crude futures climbed 24 cents, or 0.38%, to $78.15 a barrel, while US West Texas Intermediate (WTI) crude advanced 33 cents, or 0.46%, to $74.19 a barrel.

Oil prices dropped by more than 3% on Monday after the United States granted Iran a 60-day sanctions waiver following the initial round of peace negotiations. The decline was further supported by reports indicating a pause in hostilities in Lebanon under the wider agreement.

What’s driving crude oil prices today?

According to a Bloomberg report, US and Iranian officials reported constructive progress in the initial round of negotiations aimed at securing a long-term agreement to end the conflict that began in late February. However, differences remain, with Vice President JD Vance stating that Iran had agreed to admit nuclear inspectors into the country—a claim that Tehran has rejected.

The waiver allows nearly all buyers, including US refiners, to purchase and pay for Iranian crude oil, though some may remain cautious due to potential risks. Meanwhile, oil supply from the Persian Gulf has increased in recent weeks, as countries such as Kuwait and the United Arab Emirates have found alternative ways to maintain exports. Iran has also shipped more than 30 million barrels of oil over the past week.

In a post on Truth Social on Monday, Trump also stated that Iran would permit weapons inspections aimed at ensuring what he described as “nuclear honesty.”

Meanwhile, ship-tracking data showed that two crude oil tankers carrying nearly 2 million barrels of oil successfully passed through the Strait of Hormuz on Monday, indicating a recovery in maritime traffic after reduced movement on Sunday amid concerns over the safety of the route.

In a separate development, data released by the US Department of Energy on Monday revealed that crude oil inventories in the Strategic Petroleum Reserve declined to 331.2 million barrels last week, their lowest level since June 1983, as supplies remained under pressure following the US-Iran conflict.

(With inputs from agencies)

Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.