Oil prices slide 3% as fragile US-Iran ceasefire holds, US escorts ship through Strait of Hormuz

* Strait of Hormuz partially reopens, ​easing supply fears

* US ⁠military escorts ships, destroys Iranian boats and drones

* Trump downplays ​Iran's capabilities

* Market awaits US oil inventory data; analysts expect 2.8-million-barrel storage draw

NEW YORK, May 5 (Reuters) - Oil prices fell about 3% on Tuesday, ​as ‌at least one vessel passed through the Strait of Hormuz and the United States said the ceasefire with Iran remained in place despite exchanges ⁠of fire.

Brent futures fell $3.83, or 3.4%, to $110.61 a barrel at 12:33 p.m. ⁠ET (1633 GMT), while U.S. West Texas Intermediate crude ​fell $4.23, or 4%, to $102.19. The United Arab Emirates said it was under attack from Iranian missiles and drones on Tuesday, even as Washington said the shaky ceasefire was intact.

"While tensions remain unresolved, the market is reacting to incremental normalization in shipping conditions, pulling back some ​of the ‌elevated risk premium built into prices," analysts at energy consulting firm Gelber & Associates said. U.S. Defense Secretary Pete Hegseth said the U.S. had secured a path through the critical waterway and that hundreds of ships were lining up to pass through.

Before the U.S. and Israel attacked Iran on February 28, about 20% of global oil supplies passed through the strait daily. Maersk said the ​Alliance Fairfax, a U.S.-flagged vehicle carrier, exited the Gulf via the strait, accompanied by the U.S. military.

"It shows that limited safe ‌passage is possible under current conditions and helps chip away at some of the worst-case supply disruption fears," said Tim Waterer, chief market analyst at KCM Trade, in an email.

"However, ‌it's still very much a one-off event rather than a full reopening," he added. U.S. President Donald Trump dismissed Iran's military capability and said Tehran "should wave the white flag of surrender," noting Iran's military has been reduced to firing "peashooters" and that Tehran privately ​wants to make a deal.

The U.S. military said it destroyed six Iranian small boats, as well as cruise missiles and drones, after Trump sent ‌the navy to escort stranded tankers through the strait in a campaign he called "Project Freedom."

South Korea is reviewing whether to join Trump's plan to help ships transit through the strait, an official said on Tuesday, following an explosion and fire on a Korean-operated ship in ⁠the waterway.

US ⁠OIL INVENTORIES

The oil market awaited direction from weekly storage reports from the American ‌Petroleum Institute trade group later on Tuesday and the U.S. Energy Information Administration on Wednesday.

Analysts estimated energy firms pulled 2.8 million barrels of crude from storage during ​the week ended May 1.

If ​correct, that would be the first time energy firms pulled crude out of storage ‌for two weeks in a row since January. It compares with a decrease of 2 million barrels in the same week last year and an average decline of 2.3 million barrels over the past five years (2021 to 2025). (Reporting by Scott DiSavino, Alex Lawler, Anushree Mukherjee and Trixie Yap; Editing by Barbara Lewis, Franklin Paul, Rod Nickel)