Oil prices climbed in early Asian trading on Tuesday, recovering part of the sharp losses recorded in the previous session as Iran rejected claims of direct negotiations with the United States, prompting traders to refocus on tightening global supply.
Following the developments, West Texas Intermediate rose by about 3.87 percent to around $91.54 per barrel, while Brent crude gained 3.43 percent to approximately $103.40 per barrel.
The rebound comes after a steep decline on Monday, when prices dropped after Donald Trump signalled that Washington had held constructive discussions with Tehran and would delay planned strikes on Iranian energy infrastructure. Brent briefly slipped below the $100 mark, its lowest level in nearly two weeks, as markets initially interpreted the development as a potential easing of tensions.
However, Iranian officials swiftly pushed back against the claims. Authorities in Tehran maintained that no direct or indirect negotiations had taken place with the United States, describing reports of talks as inaccurate. Mohammad Bagher Ghalibaf also dismissed the suggestion of engagement, stating that such claims were aimed at influencing market sentiment.
Despite a positive reaction in broader financial markets, including gains across Asian equities and on Wall Street, oil traders have remained cautious, shifting attention back to supply fundamentals rather than diplomatic signals.
The ongoing conflict, now entering its fourth week, has continued to disrupt energy flows across the Middle East, a region critical to global oil supply. Analysts note that damage to infrastructure and reduced production levels are likely to keep prices elevated, even if tensions ease in the near term. The International Energy Agency estimates that dozens of major energy facilities across the region have been impacted.
Meanwhile, activity around the Strait of Hormuz remains tightly controlled. The waterway, which typically handles about one fifth of global oil and liquefied natural gas shipments, has seen significantly reduced traffic since late February.
Recent shipping data indicates that only a limited number of vessels have been allowed to pass, under what analysts describe as a selective transit system. Energy shipments bound for key buyers such as China and India have been prioritised, while overall movement through the corridor remains constrained.
In a notable development, a very large crude carrier transported approximately two million barrels of Iraqi oil through the strait, marking one of the first such movements since restrictions intensified. The cargo was delivered to India, reflecting a pattern in which permitted shipments are being directed toward specific markets.
Tracking data also suggests unusual shipping behaviour, including the use of vessels with altered or inactive identification systems, as well as tankers previously thought to be out of service reappearing in regional waters.
Market observers say these developments underscore the fragile state of global supply chains. While diplomatic signals may introduce short term volatility, the underlying constraint on oil flows continues to support prices.
As a result, traders are expected to remain highly sensitive to both geopolitical developments and physical supply disruptions, with price movements likely to stay volatile in the near term.