Oil prices rebounded on Tuesday as concerns over a prolonged US-Iran conflict and uncertainty surrounding peace negotiations triggered renewed volatility across energy markets, following a sharp selloff in the previous session, according to a report by Bloomberg.

Brent crude approached $107 a barrel, while West Texas Intermediate climbed above $98, recovering from an almost 8% decline on Monday – its steepest fall in three months. The recovery followed reports that significant differences remain between Washington and Tehran despite indications of progress in diplomatic discussions.

Iranian President Masoud Pezeshkian said the country's supreme leader had granted his government greater authority to negotiate, while US President Donald Trump also suggested talks were advancing. However, disagreements persist over sanctions relief, frozen Iranian assets, the reopening of the Strait of Hormuz and restrictions on Iran's nuclear programme.

Geopolitical tensions remain elevated, with reports of continued military activity around the Strait of Hormuz. The uncertainty has driven sharp price swings, with Brent gaining almost 14% in October before Monday's selloff, while European natural gas futures fell nearly 9% and US heating oil recorded its largest decline in six months.

The volatility highlights the challenges facing commodity-focused and global macro hedge funds as shifting expectations around the conflict drive rapid reversals in energy prices. The outlook remains highly sensitive to diplomatic developments, potential disruptions to Gulf oil shipments and the risk of renewed military escalation.