Oil prices retreated Tuesday as traders weighed Middle East escalation risks. Brent crude fell 1.2% to $113.24 per barrel while WTI dropped 1.8% to $104.57, reversing sharp Monday gains. The U.S.-Iran ceasefire appears fragile after Iranian attacks on the UAE and reported American military actions in the Strait of Hormuz. President Trump warned Iran would face severe consequences if it targets U.S. vessels protecting commercial shipping routes. While Trump suggested the conflict could last two to three weeks, market strategists remain skeptical given recent escalations and repeated timeline extensions. Iraq is offering crude discounts to buyers willing to navigate the volatile strait. Global oil inventories remain adequate but refined product buffers are depleting rapidly, raising concerns about potential localized shortages in key petrochemical markets.
