According to reports, international oil prices extended their two-day decline as increased crude exports from the Persian Gulf and a significant price cut by Saudi Arabia provided further signs that supply is loosening. WTI crude futures stabilized near $89 per barrel after falling 3.7% over the previous two trading sessions, while Brent crude futures settled near $100 per barrel on Monday. Meanwhile, the WTI front-month spread — the price difference between the two nearest contracts — indicated that near-term supply tightness is easing. On Tuesday, the spread stood at a backwardation of $1.28 per barrel, down from $4.69 two weeks earlier.

Gulf oil-producing nations are shipping more crude through the Strait of Hormuz, and although shipping risks in the waterway remain elevated, an increasing number of tankers are willing to take on the risk. Kuwait said its current crude output is at roughly 75% of pre-war levels. Iraq is seeking to hire more vessels to transport its crude through the Strait of Hormuz. At the same time, Saudi Aramco cut the price of its flagship Arab Light grade for Asian buyers to a six-year low in a bid to compete for market share. Since the United States and Israel attacked Iran in February, disrupting supply, Brent crude has still gained more than 60% this year. Although Middle East crude flows have recovered to near pre-conflict levels, refined product shipments remain constrained, partly due to Ukraine's attacks on Russia.

The risk of further escalation in geopolitical tensions remains. In Yemen, Saudi-backed forces seized the Red Sea city of Mocha from Iran-backed Houthi rebels and are advancing toward the Bab el-Mandeb Strait, a critical chokepoint and a key route for Saudi crude exports. In recent months, the Houthis' escalating campaign against Saudi Arabia has already damaged energy infrastructure and tankers. Later on Tuesday, the U.S. Energy Information Administration (EIA) will release its Short-Term Energy Outlook, which includes expectations for fuel markets during the Northern Hemisphere winter. With the market under severe strain and prices at record highs, the outlook will provide important guidance on conditions in the diesel and heating oil markets. On the fuel front, according to people familiar with the matter, U.S. President Donald Trump is preparing to relax restrictions on tax-exempt dyed diesel to lower costs. The measure could be introduced before next month's midterm elections and would allow broader use of the product. Robert Yawger, head of energy futures at Mizuho Securities USA, wrote in a report: "You have to wonder whether the Iranians will try to take advantage of this period before the midterm elections. The situation is dangerous, and high energy prices are the price that must be paid."