But hostilities suggest the war - and the Hormuz blockage - could continue indefinitely: File Image/Pixabay

As of 6:04 GMT on Tuesday, oil prices incurred substantial declines  based on U.S. president Donald Trump’s contention that a peace deal with Iran that would re-open the Strait of Hormuz is only several days away.

Brent fell by 3 percent to $91.40, while West Texas Intermediate dropped 3.9 percent to $87.74.

However, as has been the case since the beginning of the U.S./Iran war, circumstances influencing trading continued to turn on a dime, and mid-session Tuesday saw reports that Iran downed a military helicopter with U.S. pilots, causing Trump to state, “The United States must, of necessity, respond to this attack.”

Still, JPMorgan estimated that due to the U.S. Navy quietly coordinating the passage of ships through the Hormuz, some 2 million barrels per day (bpd) might be getting out on tankers that have switched off their transponders.

The banks analysts stated, “Despite the ongoing naval blockade and the steep decline in commercial traffic, surprising volumes of crude and petroleum products still appear to be transiting the Strait.”

The ultimate question pertaining to trading – whether highly-touted diplomacy between the U.S., Israel and Iran would lead to a meaningful resolution given the deep-seated hostilities between these countries – remained very much on the radar of oil analysts on Tuesday.

After it was announced that Iran had ended its military operations against Israel, Tim Waterer, chief market analyst at KCM Trade, said, “While there is some relief from the latest pause in direct strikes, investors are not convinced the truce will hold.”

Tony Sycamore, market analyst at IG, added, “The geopolitical backdrop remains tense, and a lasting peace deal remains elusive.”

Additionally, even if diplomacy is a success, Al Salazar, head of oil and gas research at industry consultant Enverus, pointed out that “We believe prices still need to be firmly in triple digits to account fully for depleted stock levels.”

To top things off, the economic impact of three months of war was beginning to become apparent, especially in India, where investment banks, brokerages, rating agencies, and even its central bank are lowering economic growth forecasts.

Following India introducing measures to protect its currency, which has plunged to an all-time low versus the U.S. dollar, the country’s inflation was set to accelerate to 4.8 percent in fiscal 2027, even if oil prices average $90 per barrel; should a $10 per barrel increase occur, inflation could swell to 5.6 percent, GDP growth could decline to 5.9 percent, and the deficit could increase to 4.8 percent of GDP.