The S&P/ASX200 fell 38 points by noon on Tuesday, to be down 0.43 per cent to 8,876, as the broader All Ordinaries lost 37.7 points, or 0.41 per cent, to 9,090.3.
The slip followed a Wall Street rally after the US and Iran struck a peace deal that would include the reopening of the Strait of Hormuz.
But key agreement details, mine removal and the re-establishment of shipping insurance top a long list of practical barriers to pre-conflict oil and gas supply levels.
"We are of the view that the reopening of the strait will remain a challenging logistical process regardless of the start date," RBC Capital Markets head of global commodity strategy Helima Croft said.
"While we anticipate an increase in traffic as ships look to exit after 100-plus days on the water in the Gulf, we think it will take months to reach anything close to February 27 levels (especially if the security environment remains unsettled) and that peak Hormuz flows may actually be in the rear-view mirror."
Energy stocks were the only sector in the green by midday, up 1.1 per cent as oil prices stabilised from Monday's sell-off, supporting rebounds in Woodside, Santos and coal producers.
The picture wasn't so clear for refinery operators, with Viva up 1.9 per cent to $2.16 and Ampol trading flat.
Basic materials fell as BHP and Rio Tinto wavered after a strong start to the week, counterbalancing a continued bounce in gold stocks as the precious metal firmed to $US4,318 ($A6,112) an ounce.
Financials also slipped, as CommBank, NAB and Westpac lost roughly 0.6 per cent each, as stakeholders continued to lament the federal government's planned tax shake-up at a Senate inquiry.
Consumer discretionary and IT stocks underperformed the broader market, each sector down 1.6 per cent.
In company news, shareholders in logistics group Qube have voted in favour of a takeover by a consortium led by Macquarie Asset Management.
Elon Musk's much-hyped and recently listed SpaceX company surged in after-hours trading in the US to a valuation above $US3 trillion ($A4.2 trillion).
"That said, liquidity is significantly lower than during regular market hours, which typically results in wider spreads and higher volatility," IG market strategist Tony Sycamore said.
The Australian dollar was buying 70.62 US cents, down slightly from 70.75 US cents on Monday at 5pm.
Economists are widely tipping the Reserve Bank of Australia to hold the official cash rate at 4.35 per cent on Tuesday.
But markets will be closely watching RBA governor Michele Bullock's address for hints at the central bank's path ahead.
