Global oil prices fell sharply on Tuesday as renewed diplomatic engagement between the United States and Iran eased concerns over prolonged disruptions to crude supplies in the Middle East.
According to data from Oilprice.com, Brent crude, the international benchmark, dropped below $84 per barrel to trade at approximately $83.92, down from about $87 on Monday.
The U.S. benchmark, West Texas Intermediate (WTI), also declined to around $79 per barrel.
The decline follows signs of progress in talks between Washington and Tehran, which have reduced fears of an extended closure of the Strait of Hormuz—a critical global shipping route through which nearly 20 percent of the world’s oil supply passes.
Oil prices had surged above $100 per barrel last week after the United States launched strikes on Iran on February 28 over concerns about Tehran’s nuclear ambitions.
The subsequent exchange of attacks disrupted maritime activities in the Gulf and prompted the closure of the Strait of Hormuz, raising fears of a significant global supply shock.
Although the waterway was briefly reopened following a ceasefire agreement between the two countries last month, it was later shut again amid renewed hostilities.
Fresh developments on Tuesday, however, suggested a possible breakthrough.
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Reuters reported that Iran had proposed a temporary arrangement through Oman that would allow shipping traffic to resume through parts of Iranian territorial waters while broader negotiations continue.
Iran’s Deputy Foreign Minister, Kazem Gharibabadi, told state television that Tehran rejected an earlier Omani proposal for an equal division of transit routes, arguing that it failed to adequately address Iran’s security concerns.
He warned that the Strait would remain closed if Oman declined Iran’s latest proposal, adding that Tehran has never formally recognized the southern shipping corridor along Oman’s coast.
The prospect of restoring oil flows through the strategic passage helped calm markets, reversing part of last week’s sharp rally.
Meanwhile, U.S. President Donald Trump said negotiations with Iran were progressing positively but warned that military options remained on the table if diplomacy failed.
Speaking to Fox News on Tuesday, Trump said he preferred a peaceful resolution but threatened to target key Iranian infrastructure—including power plants, bridges, and the underground “Kolang Mountain” nuclear facility—if talks collapsed.
“I could knock out all their power plants in one day. About 91 million people would be left without electricity and without bridges. But if I can avoid doing that, I’d prefer for it not to happen,” Trump said.
He also claimed that most of Iran’s major bridges could be destroyed “in under two hours,” adding that Iranian officials were fully aware of the potential consequences of a breakdown in negotiations.
Ahead of a meeting with Israeli Prime Minister Benjamin Netanyahu at the White House, Trump dismissed suggestions that the United States needed Israeli intelligence regarding the Kolang Mountain facility, insisting that Washington already possessed comprehensive knowledge of the site.
The U.S. president further claimed that previous American strikes on Iran’s nuclear facilities in Natanz, Fordow, and Isfahan had significantly weakened Tehran’s nuclear programme, warning that additional targets could be struck if diplomatic efforts fail.
The renewed push for dialogue has provided some relief to energy markets, with investors closely monitoring developments that could determine the future of global oil supply and price stability.
