Meanwhile, over 2.6 billion barrels of oil have been lost due to hostilities: Aramco: File Image/Pixabay

Oil on Tuesday extended its losses as investors chose to be optimistic about the latest round of mixed messages emanating from the U.S. and Iran regarding a diplomatic resolution to the war between the two countries - and despite reports revealing a massive global loss of crude since the hostilities began.

As of 1519 GMT, Brent fell $3.30 to $80.47 per barrel, and West Texas Intermediate dropped $3.67 to $76.67 per barrel.

The source of optimism was U.S. secretary of state Marco Rubio, who claimed there was progress in talks with Iran and Oman ⁠about moving more ships through the Strait of Hormuz.

Treasury secretary Scott Bessent suggested that a final agreement to reopen the Strait could come within 24 hours.

Simon-Peter Massabni, head of business development at XS.com, said, "If negotiations between the United States and Iran make meaningful progress, the market could continue pricing in a lower probability of supply disruptions, further reducing the geopolitical risk premium embedded in crude prices."

But the optimism was amid profound concerns about the feasibility of peace between Iran and the U.S. as well as the damage the war has caused to the global oil market.

Julianne Geiger, market analyst at Oilprice.com, pointed out that “traders once again priced in a U.S.-Iran agreement before anyone had actually signed one,” and that despite upbeat media accounts of diplomatic talks, Iran is “seeking control over inbound shipping and visibility over outbound traffic [in the Strait], with the ability to intervene when it sees fit.”

Meanwhile, a Liberian-flagged cargo ship was struck by a projectile in the Strait near the coast of Oman, causing crew to abandon the vessel as rescuers searched for a missing crew member.

Also on Tuesday, Saudi Aramco reported that more than 2.6 billion barrels of oil has been lost since the war began in February. ‌

Aramco CEO Amin Nassar said, “If the Strait were to open today, it would take up to 18 months at an average rate of 2.1 million barrels per day to replenish depleted inventories.”

For its part, Enverus Intelligence Research, a subsidiary of Enverus, maintained a higher-for-longer outlook for crude prices: EIR director Al Salazar wrote, “Oil markets remain vulnerable despite recent volatility. Inventories are approaching historically low levels, Chinese crude demand is expected to recover, and risks around the Strait of Hormuz and Bab el-Mandeb continue to threaten supply.

“Together, those factors support our $100-per-barrel Brent outlook through the second half of 2026 and 2027.”