Oil prices slipped in early trading on Tuesday as market anxiety over potential Middle East supply disruptions continued to fade. WTI crude futures dipped 0.3% to $68.46 per barrel, reflecting growing confidence that shipping routes will remain open.

Citi Research analysts noted that while the U.S.-Iran diplomatic process remains fragile, they expect the memorandum of understanding to evolve into a formal deal within months. The analysts emphasized that shipping flows through the Strait of Hormuz are returning to normal patterns, removing a major source of geopolitical risk that has pressured prices recently.

The waterway handles approximately one-fifth of global oil shipments, making it a critical chokepoint for energy markets worldwide. Any sustained disruption there would typically send prices sharply higher as traders price in supply shortages.

With tensions easing, energy investors are shifting focus toward OPEC+ production decisions and broader demand outlook. The modest decline suggests markets are comfortable with current supply-demand fundamentals, though vigilance remains warranted given the region's volatility.