Oil Prices Slide to $90 a Barrel as US-Iran Diplomacy Raises Hopes for End to Mideast War

Crude oil prices extended their decline for a second consecutive session on Tuesday, falling to around $90 a barrel as growing optimism over diplomatic efforts to end the Iran war drove a broad selloff. December WTI futures slipped an additional 0.15% on the day, compounding a sharp 7.4% drop on Monday, pushing crude to its lowest level in roughly 2.5 months. December RBOB gasoline also fell, dropping 0.98% to touch an eight-month low.

The selloff was driven by signals from both Washington and Tehran that a negotiated settlement may be within reach. President Trump said he wants to give diplomacy with Iran another shot after reportedly rebuffing Israeli pressure for a new round of strikes, while Iranian President Masoud Pezeshkian indicated Tehran is open to resolving the conflict through dialogue. Rumors of concrete progress toward a deal circulated through markets during Tuesday's session. Hopes for an end to the Ukraine conflict added further downward pressure, according to Semafor.

Restored oil flows through the Strait of Hormuz, which had been disrupted during the eight-month conflict, reinforced the price drop by easing supply fears. Seasonal demand factors are also weighing on the market, with analysts suggesting conditions could keep US retail gasoline prices below $4 a gallon if the diplomatic momentum holds.