KEY POINTS
- Oil prices rose over 3% as stalled US–Iran peace talks reignited fears of supply disruptions from the Middle East.
- Brent crude climbed above $107 amid concerns over the Strait of Hormuz and falling OPEC output.
- Analysts warn prices could swing sharply depending on whether diplomacy eases tensions or further escalates the conflict.
Global oil prices jumped by more than 3% on Tuesday after renewed tensions between the United States and Iran stalled progress on a proposed peace deal, reigniting fears of supply disruptions from the Middle East.
Brent crude futures rose by $3.47, or 3.3%, to $107.68 per barrel, while U.S. West Texas Intermediate (WTI) gained $3.54, or 3.6%, to $101.61. Both benchmarks had already climbed nearly 3% in the previous trading session, underscoring how quickly sentiment in the energy market has shifted back toward supply risk concerns.
The latest price rally was triggered by a breakdown in negotiations between Washington and Tehran over ending hostilities in the Middle East. According to market participants, both sides have rejected key elements of each other’s proposals, pushing the fragile ceasefire process to the brink.
U.S. President Donald Trump said the ceasefire was on “life support”, pointing to unresolved issues including demands for a full cessation of hostilities, the lifting of naval restrictions, the resumption of Iranian oil exports, and compensation for war-related damage.
Iran, meanwhile, has doubled down on its sovereignty over the Strait of Hormuz, a critical maritime corridor through which roughly one-fifth of global oil and liquefied natural gas flows. Any disruption in the waterway continues to be viewed as a major systemic risk for global energy markets.
Strait of Hormuz Risks and OPEC Output Concerns
The Strait of Hormuz has once again become the focal point of market anxiety, with analysts warning that even partial disruption could significantly tighten global supply. Some producers have already reduced exports amid uncertainty surrounding shipping routes and regional security.
A Reuters survey indicated that OPEC crude output in April fell to its lowest level in more than two decades, reflecting the broader strain on global supply chains linked to the conflict.
Saudi Aramco chief executive Amin Nasser also warned that sustained disruption through the Strait could delay a return to stable market conditions until 2027, potentially removing around 100 million barrels of oil per week from global flows in extreme scenarios.
Analysts say oil markets are now highly sensitive to any political developments. One market strategist estimated that a credible peace breakthrough could trigger a sharp correction of $8 to $12 per barrel, while further escalation or renewed blockade threats could push Brent crude above $115.
At the same time, traders are watching global inventory signals closely, with U.S. crude stocks expected to have fallen by about 1.7 million barrels in the latest reporting week, suggesting some underlying tightness in supply.
China–U.S. diplomatic engagement is also in focus, with upcoming talks between President Donald Trump and Chinese President Xi Jinping expected to influence broader energy and trade sentiment, particularly as sanctions targeting Iranian-linked oil shipments continue to reshape flows to Asia.
