Oil Markets Braced for Volatility as U.S. Weighs Iran's Hormuz Proposal

Oil prices trended upward on Tuesday as traders reacted to reports that the U.S. administration is reviewing a proposal from Iran to restore traffic through the Strait of Hormuz. West Texas Intermediate (WTI) futures climbed 0.66% to $97.03 per barrel, while Brent crude increased 0.44% to $108.67. The proposal, confirmed by White House Press Secretary Karoline Leavitt, suggests a reopening of the critical waterway conditional upon Washington ending hostilities and lifting its current blockade. President Donald Trump has previously maintained that sanctions relief would only be granted upon the completion of a comprehensive agreement, leaving the market uncertain if this proposal will serve as a viable path to de-escalation. The Strait of Hormuz remains a vital artery for global energy, transporting approximately 20 million barrels of crude, fuels, and petrochemicals daily—roughly one-fifth of the world's total oil and LNG supply. The current two-month conflict has severely disrupted these flows, pushing global inventories toward critical operating levels. Market analysts suggest that the path to stability remains long regardless of a diplomatic breakthrough. Andy Lipow of Lipow Oil Associates noted that clearing mines and resolving tanker congestion could take four to six months. While a sudden peace deal could potentially slash prices by $10 per barrel, a failure in negotiations could push WTI toward $100 and Brent beyond $110.