Oil gained as prospects for a near-term resolution of the US-Iran war receded, with a fresh vessel attack reported in the Strait of Hormuz.
Brent rose toward $92 a barrel, advancing for a third day, while West Texas Intermediate was above $85. President Donald Trump said he’s not interested in extending an agreement with Tehran that technically expired on Monday.
The two sides remain far apart on a host of issues, including Hormuz. While Iran is negotiating with Oman on how the critical waterway should be managed, Washington is not part of those talks. Trump has threatened to bomb Oman if it got in the way of a US naval blockade, Fox News reported.
A vessel was struck by an unknown projectile heading out of the strait, causing engine-room damage and a crew casualty, the UK Maritime Trade Operations said on Tuesday. Authorities are investigating, it added.
Brent crude has rallied by 50 per cent this year as the war dragged on, impeding flows of energy from the Middle East. Still, Persian Gulf producers appear to be increasingly adept at shuttling oil through Hormuz to reach global users. Saudi Arabia is now offering cargoes from outside the chokepoint, a sign the kingdom may be following the United Arab Emirates in getting barrels out.
“Trump’s threats to Oman, and his pushback on urgency for a new ceasefire prompted oil traders to push Brent futures through last week’s highs,” said Chris Weston, head of research at Pepperstone Group. “There are reasons to think the upside is there to chase.”
Other officials also signalled Washington was in no hurry to end a conflict now approaching the end of its sixth month. Energy Secretary Chris Wright told Fox News the US was playing the long game with the Islamic Republic, while envoy Jared Kushner said Trump would be patient on a deal.
The US has flagged it wants to use economic pressure to force Tehran to capitulate, potentially pivoting away from military force as it maintains the blockade of Iran’s ports. Last week, Treasury Secretary Scott Bessent said new measures “like have never been seen” would be announced soon.
Traders will also be on alert for fresh data on US stockpiles after figures last week showed holdings posted a surprise increase to the highest in about two months. Later Tuesday, the industry-backed American Petroleum Institute will release its estimates for inventories, followed by official figures midweek. - Bloomberg
