US-Iran war: Oil prices advanced on Tuesday as hopes of a deal to end the Middle East conflict weakened, with Iran signalling a more aggressive approach and the US ruling out an extension of the ceasefire. The developments heightened concerns over potential disruptions to energy supplies.
Brent crude futures rose 27 cents, or 0.3%, to $91.14 a barrel, after touching their highest level since July 30 in the previous session. US West Texas Intermediate (WTI) crude futures gained 42 cents to $85.04 a barrel, following an earlier rise of more than 1% to $85.37, its strongest level since July 31.
What’s driving the crude oil prices today?
The memorandum cited by the US president was signed in June and, technically, expired on Monday.
However, Washington and Tehran remain sharply divided on several key issues, including the Strait of Hormuz. Iran is currently in discussions with Oman over the management of the vital waterway, while the US is not involved in those negotiations. Trump has threatened to bomb Oman if it interferes with a US-led blockade, Fox News reported.
US officials have also indicated that Washington is in no rush to bring the conflict, now nearing its sixth month, to an end. Energy Secretary Chris Wright told Fox News that the US was taking a long-term approach in dealing with Iran, while envoy Jared Kushner said Trump was prepared to be patient in pursuing an agreement.
Crude oil prices have climbed nearly 50% this year as the prolonged war has disrupted energy flows from the Middle East. However, Persian Gulf producers appear to be finding increasingly effective ways to move oil through the Strait of Hormuz and supply international markets. Saudi Arabia is now offering cargoes sourced from outside the chokepoint, suggesting that the kingdom could be following the UAE’s strategy of finding alternative routes to export its oil.
“Brent extended gains today to $89.5 a barrel and WTI surged above $83, as prospects for a deal to ease US-Iran tensions continued to fade, with fresh fighting in Lebanon and continued attacks on Hormuz-transiting vessels keeping supply risk elevated. The 60-day US-Iran window for a final settlement expired without a deal, and Treasury Secretary Bessent’s promised unprecedented sanctions on Iran, expected this week, are still pending. With Hormuz, the expired deadline, and looming sanctions all in play, prices look set for continued volatility, an escalation or a sanctions-driven rupture could push crude toward $95, while a lull in strikes would quickly cap gains,” said Kaynat Chainwala, AVP Commodity Research, Kotak Securities.
(With inputs from agencies)
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
