Oil prices dropped on Tuesday after the U.S. said the ceasefire with Iran is not over despite Tehran's attacks and Washington guaranteeing passage for a ship through the Strait of Hormuz.
Both Brent crude and the West Texas Intermediate fell, reversing some of the increases seen on Monday. The former did so by close to 3%, standing above $111 at 9:46 a.m. ET, while the latter's drop was closer to 4%, standing at $102.31 at the same time.
The two developments appear to be contributing to the drop in oil prices. Defense Secretary Pete Hegseth said the "ceasefire is not over" despite Iran's attacks against the UAE and Oman, as well as U.S. ships in the region, and the U.S.'s sinking of six Iranian boats.
"No, the ceasefire is not over. Ultimately, this is a separate and distinct project, and we expected there would be some, some churn at the beginning, which happened," Hegseth said in a press conference at the Pentagon.
"Project Freedom is defensive in nature, focused in scope and temporary in duration, with one mission: Protecting innocent commercial shipping from Iranian aggression," he added.
Moreover, top shipping company Maersk said that one of its vessels has managed to sail the Strait of Hormuz with U.S. protection.
The company said the ship crossed on Monday after being stranded at sea since the war began on February 28. All crew members were unharmed.
The Maritime Information Center, led by the U.S., had advised ships to cross through Omani waters, saying it had set up an "enhanced security area" and managed to create a path free of sea mines.
President Donald Trump threatened Tehran on Monday over the matter, saying it would be "blown off the face of the Earth" if its forces seek to prevent ships from crossing the key waterway.
He went on to say that the U.S. military buildup in the region continues to grow. "We have more weapons and ammunition at a much higher grade than we had before."
"We have the best equipment. We have stuff all over the world. We have these bases all over the world. They're all stocked up with equipment. We can use all of that stuff, and we will, if we need it."
Iranian Foreign Minister Abbas Araghchi said in a social media post that the developments "make clear that there's no military solution to a political crisis."
"As talks are making progress with Pakistan's gracious effort, the U.S. should be wary of being dragged back into quagmire by ill-wishers. So should the UAE. Project Freedom is Project Deadlock," he added.
