Oil Prices at Near Three-Week High as US-Iran Peace Hopes Fade

Oil prices traded slightly higher ​for a third session on Tuesday as prospects receded for a deal to end the Middle ‌East war, with Iran saying it would adopt a more offensive stance and the U.S. ruling out extending a ceasefire deal, heightening worries about prolonged energy supply disruptions.

Brent crude futures were up 20 cents, or 0.22%, to $91.07 a barrel at 1203 GMT. U.S. ​West Texas Intermediate crude futures were up 49 cents, or 0.58%, at $84.99 a barrel.

Brent and WTI futures ​traded at their highest since July 30 and July 31, respectively, earlier in the session.

“Sentiment ⁠remained supported by U.S. President Donald Trump’s decision not to extend the U.S.-Iran peace agreement and continued security ​concerns in the Strait of Hormuz,” ING analysts wrote in a note.

Outward progress on peace talks and resumption of ​oil tanker traffic through the strategic Strait of Hormuz has halted, threatening to extend the conflict the United States and Israel launched with attacks on Iran on February 28.

Iran will keep the Strait of Hormuz closed until the U.S. meets the conditions of the interim deal ​signed in June, top Iranian negotiator Mohammad Baqer Qalibaf said in comments published by state media on Tuesday. ​Trump had previously labelled that deal “over”.

Qalibaf’s comments came after a senior Iranian official told Reuters on Monday that Iran will shift to ‌a “fully ⁠offensive” military posture as efforts have stalled towards a permanent end to the war.

“The lack of any kind of deal will have an impact on oil price expectations further out in 4Q and even in 2027,” said DBS Bank’s head of energy research Suvro Sarkar.

Some oil is escaping Hormuz however, though crossings are in the single digits. Saudi ​Aramco has resumed oil loadings from ​inside the Strait of ⁠Hormuz, and is offering cargoes for loading via ship-to-ship transfers off Fujairah in the UAE.

“It is probably in Iran’s power to fully halt the flow of oil out of ​the Strait of Hormuz whenever they find it suitable,” said SEB analyst Bjarne ​Schieldrop.

Iran has separately ⁠been negotiating with Oman an agreement on managing the Strait of Hormuz and says they are close to a deal. But Trump responded to those talks with a threat to bomb Oman, a longstanding U.S. security partner.

Elsewhere in the Middle East, ⁠Yemen’s Houthis ​launched missiles in an attack on vessels they described as a Saudi ​military ship and four escorts in the Red Sea, their military spokesperson, Yahya Saree, said on the Telegram messaging app.