Oil prices climbed on Tuesday as Middle East peace efforts appeared to slip further away, with Iran signalling a shift to a "fully offensive" military posture and Washington ruling out extending a temporary ceasefire, according to Reuters. Brent crude futures rose 27 cents, or 0.3%, to $91.14 a barrel by 0003 GMT, after reaching their highest since July 30 on Monday. US West Texas Intermediate (WTI) futures gained 42 cents to $85.04 a barrel, having earlier touched $85.37, their strongest since July 31.
Ceasefire diplomacy stalls
Iran will shift to a "fully offensive" posture because efforts to negotiate a permanent end to the war with the US have stalled, a senior Iranian official told Reuters on Monday. Washington ruled out extending the temporary ceasefire agreement, Reuters reported. Outward progress towards peace talks and a resumption of oil tanker traffic through the Strait of Hormuz has ground to a halt, threatening to extend the conflict that the US and Israel launched with attacks on Iran on February 28.
According to Reuters, Iran has separately been negotiating an agreement with Oman on managing the strait and says the two sides are close to a deal. President Donald Trump responded to those negotiations with a threat to bomb the Gulf state, a longstanding US security partner. Media reports also said Trump had opened back-channel discussions with the Islamic Revolutionary Guard Corps, offering a glimmer of hope for diplomacy.
Supply chokeholds tighten
The disruption to oil flows is now visible in vessel counts. Following attacks on tankers, ship-tracking data from Kpler showed only five commodity vessels transited the Strait of Hormuz on Saturday, with none registered for Sunday, versus 31 in the prior weekend.
In a parallel escalation, Yemen's Houthis attacked what they described as a Saudi military ship and four escort vessels in the Red Sea with missiles, according to the group's military spokesperson Yahya Saree on Telegram.
KCM's chief market analyst Tim Waterer captured the market's view:
The dual chokehold on the Strait of Hormuz and the Bab el-Mandeb remains highly significant. These are not secondary concerns. They sit at the centre of the current supply-risk narrative.
Waterer said earlier that "a deal to reopen the Strait of Hormuz still does not appear to be in sight, and shipping numbers remain at a trickle."
| Metric | Value |
|---|---|
| Brent crude futures | $91.14/bbl (+27 cents, +0.3%) |
| WTI crude futures | $85.04/bbl (+42 cents) |
| WTI session high | $85.37 (+1%) |
| Commodity vessels through Hormuz, Saturday | 5 |
| Commodity vessels through Hormuz, Sunday | 0 |
| Commodity vessels through Hormuz, prior weekend | 31 |
Inventory expectations
On the inventory front, a preliminary Reuters poll conducted on Monday showed US crude oil stockpiles were expected to have fallen last week alongside product inventories.
What to watch
Waterer said shipping numbers remain at a trickle. Reuters reported that Iran and Oman say they are close to a deal on managing the strait, while media reports said Trump had opened back-channel discussions with the Islamic Revolutionary Guard Corps. In the Red Sea, the Houthis said they attacked a Saudi military ship and four escort vessels with missiles, according to the group's military spokesperson Yahya Saree on Telegram.
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