Oil prices dropped on Tuesday. Traders are hoping for easing of the months of tension between the United States and Iran following peace talks. However, the possibility of conflict at important navigation lanes remains a concern for the markets.

Brent crude fell to $88.45 a barrel, down 0.86%. This took U.S. West Texas Intermediate crude down 0.46% to $82.10. Both benchmarks are based on world oil prices.

Mediators have suggested a ceasefire for 10 days. The aim is to reinstate an interim agreement signed by both sides back in June. The news was comforting to investors. Yet it wasn’t enough to erase all their worries.

Peace Talks Continue Alongside Fresh Attacks

Negotiations and fighting are going on simultaneously. The U.S. military resumed new attacks on targets in Iran. Iran’s Revolutionary Guards retaliated against military U.S. installations in the area.

In another attack, a tanker off the coast of Oman was hit by an unknown projectile. The crew had to leave the ship and escape in a lifeboat. This incident has brought up new concerns regarding the safety of ships in one of the world’s busiest oil routes, the Strait of Hormuz.

Shipping Traffic Through Hormuz Drops Fast

Fewer ships are risking the journey through Hormuz. Four cargo ships passed on Monday. That’s down from seven the day before.

What it means is even more significant on a weekly basis. Lloyd’s List Intelligence reported a 66% decline in vessel crossings this past week compared to the week before. For just the tanker and gas carrier movement alone, it dropped it from 90 to 30.

Hormuz is not the only place that poses a threat. Yemen’s Houthi rebels, who are backed by Iran, have threatened to block Saudi Arabia’s coast. That may threaten access to oil via the Red Sea and Bab el Mandeb strait as well.

What This Means for Oil Prices Going Forward

Currently, the market is stuck amid hope and fear. If the ceasefire is successful, that could further lead to oil price declines. But if another attack or blockade occurs, prices could once again start to skyrocket, and shipping, insurance, and energy costs around the world would become more expensive.