Oil prices rose on Tuesday as global markets weighed supply risks after Iran denied holding talks with the United States to de-escalate the ongoing conflict, contradicting earlier claims from Washington.
Brent crude futures increased by $1.06, or 1.1%, to around $101 per barrel, while US West Texas Intermediate (WTI) climbed $1.58, or 1.8%, to $89.71 in early trade.
The rebound follows a sharp drop of more than 10% in the previous session after US President Donald Trump said Washington had made progress in negotiations with Iran and delayed planned strikes. Tehran, however, rejected those claims, calling them misleading and denying any direct contact.
Market sentiment remains fragile as traders continue to assess the risk of supply disruptions, particularly in the Strait of Hormuz, a critical route for nearly one-fifth of global oil and gas shipments.
Despite limited tanker movement through the waterway, overall flows remain heavily constrained, adding to concerns over global energy supply.
Analysts say the temporary pause in military escalation has reduced some immediate pressure on prices, but uncertainty persists. Industry estimates suggest oil could stabilize between $85 and $110 per barrel, with the potential to surge to $150 if disruptions continue or the Strait remains effectively closed in the coming weeks.
The conflict has also damaged energy infrastructure across the region, further tightening supply. In Iran, recent strikes reportedly hit gas facilities and pipelines, exacerbating fears of prolonged disruption.
Meanwhile, the United States has temporarily eased sanctions on some Russian and Iranian oil shipments already at sea to help offset shortages, while global energy agencies are considering releasing strategic reserves if needed.