The reversal was sharp because traders no longer had a clear diplomatic off-ramp to price in. Early Tuesday, Brent was back at $101.19 a barrel and U.S. crude at $90.28, while Macquarie warned Brent could still test $150 if the Strait of Hormuz remains effectively shut through April, according to Reuters reporting on Tuesday’s oil rebound.
Oil prices rebound as diplomacy hopes fade
Tehran said no negotiations had taken place and accused Trump of trying to influence both sentiment and commodity pricing. In its latest account of the diplomatic breakdown, Reuters reported that Iranian officials dismissed Trump’s comments as “fake news” and said the claim was being used to manipulate financial and oil markets, a message that quickly undercut Monday’s optimism, according to Reuters’ report on Iran’s denial.
That matters because Monday’s market move had been dramatic. Brent slid 10.9% to $99.94 after Trump said Washington and Tehran had held productive talks, while the S&P 500 rose 1.1% in a classic relief trade, as The Associated Press reported on Monday’s relief rally. By Tuesday, that trade was already looking fragile.
Why oil prices are reacting so sharply to the Strait of Hormuz
The heart of the move is not just rhetoric. It is shipping risk. The U.S. Energy Information Administration’s latest analysis of the Strait of Hormuz says oil flows through the waterway averaged about 20 million barrels a day in 2024, or roughly 20% of global petroleum liquids consumption, with few practical alternatives if traffic is disrupted.
That is why broader markets are wobbling alongside crude. Reuters said stocks, currencies and bonds were all struggling to settle into a clear direction on Tuesday, with U.S. futures lower, Treasury yields higher and investors reassessing how long an energy-driven inflation pulse could last, as global markets turned jittery again.
Oil prices have seen similar geopolitical shocks before
This is not the first time a security crisis has rewritten the oil script in a matter of hours. Reuters reported that the 2019 attacks on Saudi facilities produced Brent’s biggest one-day percentage jump in more than 30 years. In 2022, Reuters found that oil above $100 was expected to persist as the market tried to replace Russian barrels after Moscow’s invasion of Ukraine. And in June 2025, Reuters noted that renewed Iran-Israel fighting had already rebuilt a security premium into crude, showing how quickly Middle East risk can return to the market.
What comes next for oil prices and global markets
For now, traders are pricing two possibilities at once: a diplomatic opening that could unwind some of the risk premium, and a prolonged disruption that keeps freight, insurance and supply concerns elevated. That split helps explain why crude can swing by double digits in a day and why equity markets are struggling to hold any clear direction.
If a more credible negotiating channel emerges and shipping improves, Brent could give back part of Tuesday’s rebound. But if tanker traffic stays constrained and the conflict widens, the return to triple-digit oil may prove stickier than Monday’s brief sell-off suggested.
