New Delhi: Global crude oil prices stayed above $90 a barrel on Tuesday amid choppy trade, as fading hopes of a deal between the US and Iran kept geopolitical risk elevated.
Brent futures were volatile through the day before edging lower on Tuesday evening. Around 4.55 PM, the October contract of Brent futures on the Intercontinental Exchange was trading at $90.80 per barrel, lower by 0.06% from its previous close. Earlier in the day, it touched $91.74, the highest level since 30 June.
The development comes as Washington and Tehran remain sharply divided on several key issues, including the Strait of Hormuz. The memorandum of understanding (MoU) signed between the US and Iran on 17 June technically expired on Monday, but negotiations remain unresolved.
Trump has said the US is not seeking an extension of the deal with Iran and that Tehran should surrender.
Ready to respond
Iranian foreign ministry spokesman Esmaeil Baqaei has said that “gross” violations by the US have rendered the MoU’s 60-day deadline for talks to resolve issues, including sanctions on Tehran, “entirely moot”. He also said Iran’s forces are ready to respond if attacked.
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.
Meanwhile, Qatar’s foreign ministry has said mediators are awaiting a bilateral agreement between Iran and Oman before broader discussions between Iran and the US take place.
Concerns over maritime traffic also rose after the UK Maritime Trade Operations agency said a vessel transiting the strait suffered engine-room damage and a crew casualty after being struck by an unknown projectile. Prior to the war, the strait was a key channel for 20% of global oil and gas trade.
“Uncertainty is the buzzword, and it continues. MoU had been rendered ineffective much earlier and the global community and energy traders have already factored in the situation and the associated supply constraints. So, we may not witness a major shift in the global energy trade scenario,” said Sankalp Gurjar, assistant professor of geopolitics and geoeconomics at the Gokhale Institute of Politics and Economics, Pune.
Investors wary
Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm said persistent uncertainty around the US–Iran war and the Strait of Hormuz continued to underpin the geopolitical risk premium in oil prices, keeping investors wary of renewed inflationary pressures.
For India, a prolonged rise in crude prices could put pressure on the import bill and inflation. India imports nearly 90% of its crude oil requirement, and every $1 per barrel increase in prices adds about ₹18,000 crore to its annual import bill.
India’s retail inflation rose to a 19-month high of 4.45% in July, driven up by higher food and fuel prices. In the months ahead, the impact of the supply crunch may be offset by a fall in global demand.
The Organization of the Petroleum Exporting Countries (Opec) last week lowered its forecast for world oil demand growth in 2026 to 580,000 barrels per day. This was the fourth straight downward revision. The International Energy Agency has also projected weaker oil-demand growth in 2026.
