Oil prices rose on Tuesday as a resolution to the conflict in West Asia appeared increasingly distant. The upward movement in prices was driven by statements from Iran indicating a shift to a more offensive military stance, alongside the United States ruling out any extension of a temporary ceasefire agreement.
According to a senior Iranian official speaking to Reuters, the shift in military posture comes as negotiations for a permanent end to the conflict with the US have stalled. The ongoing situation has brought diplomatic progress and the resumption of oil tanker traffic through the strategic Strait of Hormuz to a halt, extending the conflict that began with US and Israel attacks on Iran on February 28.
In market trading, Brent crude futures climbed 27 cents, or 0.3 per cent, to $91.14 by 0003 GMT, following a rise to their highest level since July 30 on Monday. Simultaneously, US West Texas Intermediate crude futures increased by 42 cents to $85.04 a barrel, after touching $85.37 earlier in the session, marking their highest point since July 31.
Tim Waterer, chief market analyst at KCM, noted that oil prices jumped at the start of the week due to shaky US-Iran relations, with shipping numbers remaining low and a deal to reopen the Strait of Hormuz not yet in sight. Ship-tracking data from Kpler revealed that following attacks on tankers, only five commodity vessels transited the Hormuz strait on Saturday, with none registered for Sunday, compared to 31 in the previous weekend.
Further compounding regional supply concerns, Yemen’s Houthis launched missile attacks targeting a Saudi military ship and four escort vessels in the Red Sea, as stated by military spokesperson Yahya Saree on Telegram. Waterer emphasized that the dual chokehold on the Strait of Hormuz and the Bab el-Mandeb remains central to the current supply-risk narrative.
Amid these tensions, separate negotiations between Iran and Oman regarding the management of the Strait of Hormuz are reportedly close to a deal. However, US President Donald Trump responded to those discussions with a threat to bomb the Gulf state, a long-standing US security partner. Meanwhile, media reports indicated that back-channel discussions had opened between Trump and the Islamic Revolutionary Guard Corps.
On the supply side, a preliminary Reuters poll published on Monday indicated that US crude oil inventories and product stockpiles were expected to have fallen last week.
"The recent rise in oil prices highlights how geopolitical tensions directly impact global commodity markets and energy supply chains. For businesses and startups, particularly those dependent on logistics, manufacturing, and transport, rising crude prices can quickly translate into higher operational costs and margin pressures. Navigating such macroeconomic volatility requires resilient supply chain planning and careful financial management to absorb sudden cost fluctuations." — Dr. Shishir Gupta, Founder & CEO, StartupLanes
