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Global oil prices moved lower on Tuesday, even as investors closely monitored escalating tensions between the United States and Iran following reports that an American military helicopter was shot down near the Strait of Hormuz. The decline in crude prices came after earlier optimism surrounding potential diplomatic progress between Washington and Tehran.
Brent crude futures for August delivery dropped 2.9% to $91.49 per barrel, while U.S. West Texas Intermediate (WTI) crude futures for July delivery fell 3.4% to $88.18 per barrel. The pullback reflected hopes that geopolitical risks in the Middle East could ease, reducing concerns about global energy supply disruptions.
Market sentiment shifted after President Donald Trump stated that the United States would respond to what he described as an Iranian attack on a U.S. Apache helicopter operating near the Strait of Hormuz. According to Trump, both pilots were rescued safely and suffered no injuries, but he emphasized that a U.S. response was necessary.
The incident raised concerns that ongoing diplomatic negotiations between Washington and Tehran could face setbacks. Earlier this week, optimism had grown after Iran and Israel reportedly agreed to halt hostilities linked to recent military activity involving Hezbollah in Lebanon. Trump further fueled expectations of a breakthrough by suggesting that a nuclear-related agreement with Iran could be finalized within days.
The Strait of Hormuz remains a critical chokepoint for global oil transportation, handling roughly one-fifth of the world's oil and gas supplies. Any disruption to traffic through the waterway continues to influence energy markets and inflation expectations worldwide.
Meanwhile, the U.S. Energy Information Administration (EIA) warned that oil inventories among OECD nations are expected to decline to their lowest levels since 2003. The agency noted that reduced Middle Eastern production and restricted shipments have contributed to significant inventory drawdowns.
Despite the recent decline in oil futures, the EIA forecasts Brent crude could average around $105 per barrel during June and July as supply constraints persist. The agency also projects global oil demand to decline by 1.1 million barrels per day in 2026 before rebounding by 2.5 million barrels per day in 2027, highlighting the continued importance of energy market stability and geopolitical developments.
