Oil fell roughly $2 a barrel within an hour on Tuesday after a Russian state news agency reported an unconfirmed US-Iran ceasefire covering free navigation through the Strait of Hormuz. The move added to a broader selloff already under way, with WTI and Brent both settling sharply lower on softer-than-feared US sanctions and fresh diplomatic contacts between Pakistan, Iran and Oman.
Oil dropped roughly $2 a barrel within an hour on Tuesday after Russian state news agency RIA Novosti reported that Washington and Tehran had agreed a ceasefire including free navigation through the Strait of Hormuz. The claim rests on accounts from Pakistani military and Iranian security sources, and neither Reuters, Bloomberg, the Associated Press nor Iranian state outlets IRNA and Press TV had confirmed it as of writing.
Sourcing Doesn't Match the Size of the Move
Traders are treating the report with caution. Russia is not a direct party to the US-Iran talks, making it an unusual pattern for a Russian outlet to be first to confirm a breakthrough, though Pakistan has genuinely mediated the conflict at several points. Separately, the CIA director is currently in Moscow, but there is no indication the visit is connected to the report.
A Broader Selloff Was Already Under Way
The rumor landed on a market already sliding. Brent settled 3.9% lower at $88.58 a barrel, its lowest level in over a week, while WTI settled 3.1% lower at $82.36. Pakistan's Army Chief concluded a one-day visit to Iran, with Iranian media saying the trip yielded valuable results. According to a joint statement cited by Rigzone: "discussed the importance of resuming navigation through the Strait of Hormuz", referring to talks between Iran and Oman.
Sanctions Landed Softer Than Feared
Washington's sanctions package, unveiled Monday, stopped short of imposing secondary sanctions on nations dealing with Tehran, including China, the top buyer of Iranian crude. Countries will instead face a specific wind-down timeline before facing unilateral punishment, US Treasury Secretary Scott Bessent said. The Treasury also added new restrictions on around 60 entities tied to Tehran's oil-revenue networks and shadow fleet vessels moving its petroleum products in the crude oil trade.
Crude Still Up Sharply for the Year
Despite the two-day drop, WTI is down just 0.44% over the past 30 days, meaning the entire August range has round-tripped. WTI remains up 30.04% year over year. Desks are now watching for confirmation or denial of the ceasefire report from Western wires or Iranian state media in the hours ahead. Given how thin the sourcing is, a failure to gain traction elsewhere would raise the risk of a swift reversal.
Sources: Investinglive, Rigzone, Investing.com
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