KEY POINTS
- Brent rose to $91.22 a barrel while WTI climbed to $85.31.
- Fading US-Iran peace hopes and Hormuz security risks are supporting oil prices.
- Continued disruption to Middle East oil shipments could keep prices elevated into late 2026 and potentially 2027.
Oil prices climbed for a third consecutive session on Tuesday as hopes for a lasting peace agreement between the United States and Iran weakened, raising concerns that disruptions to crude supplies could persist.
Brent crude rose 35 cents, or 0.39%, to $91.22 a barrel, while US West Texas Intermediate (WTI) gained 81 cents, or 0.96%, to $85.31 a barrel by 0827 GMT. Both benchmarks were on course for their third straight day of gains.
The latest gains pushed oil prices to their strongest levels in several weeks.
Brent crude touched its highest level since July 30 during Tuesday’s trading session, while WTI reached its highest point since July 31. The sustained increase reflects growing concerns among traders that the conflict in the Middle East could continue to disrupt crude production, exports and tanker movements.
Market sentiment has been particularly sensitive to developments surrounding the Strait of Hormuz, one of the world’s most important oil shipping routes. Any prolonged restriction on traffic through the waterway could place additional pressure on global energy supplies and drive prices higher.
Analysts at ING said oil market sentiment remained supported by the US decision not to extend its ceasefire agreement with Iran, alongside continued security concerns around the Strait of Hormuz.
Peace Talks Lose Momentum
The rise in oil prices came as diplomatic efforts to secure a lasting settlement between Washington and Tehran appeared to lose momentum.
Iran has indicated that it could adopt a more aggressive military posture if diplomatic efforts fail, while the United States has ruled out extending the temporary ceasefire arrangement.
The uncertainty has increased concerns that the Middle East conflict could continue for longer than previously anticipated, keeping oil markets exposed to supply risks.
DBS Bank’s head of energy research, Suvro Sarkar, said the absence of an agreement could influence oil price expectations well into the fourth quarter and potentially into 2027.
The prolonged uncertainty means traders are increasingly factoring the possibility of continued disruptions into their expectations for future crude supplies.
The Strait of Hormuz remains at the centre of the oil market’s concerns.
A projectile struck a vessel travelling out of the strategic waterway on Tuesday, adding to a series of security incidents that have sharply reduced the number of vessels crossing the strait.
Tracking data showed that crossings remained in the single digits despite a modest increase from the weekend, highlighting the continuing difficulty faced by shipping companies operating through the route.
The Strait of Hormuz is critical to global energy trade, making any sustained disruption potentially significant for crude prices, refiners and consumers worldwide.
Despite the security challenges, Saudi Aramco has resumed oil loadings from inside the Strait of Hormuz and is offering some cargoes through ship-to-ship transfers off Fujairah in the United Arab Emirates.
The move provides an alternative logistical route for some crude shipments but has not eliminated concerns over the broader disruption to regional oil flows.
Analysts remain cautious because the ability of producers to maintain exports depends heavily on the security situation and the continued accessibility of the waterway.
SEB analyst Bjarne Schieldrop said Iran could potentially halt oil flows through the strait if it chose to do so, adding to concerns over the vulnerability of global crude supplies.
Iran has separately been negotiating with Oman over arrangements for managing the Strait of Hormuz.
Tehran has indicated that the two sides are close to an agreement, raising the possibility of easing tensions and restoring more normal shipping activity.
However, the diplomatic effort faces additional uncertainty after US President Donald Trump threatened military action against Oman, a longstanding US security partner, in response to the talks.
The conflicting diplomatic signals have made it difficult for oil traders to determine whether the region is moving towards de-escalation or a prolonged confrontation.
