Oil prices climbed close to 2% on Tuesday, extending the previous session’s rally, as the standoff between the U.S. and Iran showed little sign of easing. The continued disruption at the Strait of Hormuz has restricted a major share of Middle Eastern energy exports, tightening global supply.
A U.S. official said on Monday that President Donald Trump is dissatisfied with Iran’s latest proposal aimed at ending the conflict. Iranian sources indicated the proposal sidesteps discussions on Tehran’s nuclear program until hostilities cease and maritime tensions in the Gulf are resolved.
Trump’s rejection has left negotiations deadlocked. Iran continues to limit shipping through the Strait of Hormuz—through which about 20% of global oil and gas typically flows—while the U.S. maintains its blockade on Iranian ports.
Brent crude futures for June rose $2.32, or 2.1%, to $110.55 a barrel as of 0638 GMT, after gaining 2.8% in the previous session to its highest close since April 7. The contract has now posted gains for seven straight sessions.
U.S. West Texas Intermediate (WTI) crude for June increased by $1.80, or 1.9%, to $98.17 a barrel, following a 2.1% rise in the prior session.
A previous round of negotiations between Washington and Tehran broke down last week after face-to-face talks failed to deliver progress.
“Talks around ‘peace’ still look largely superficial and lack concrete evidence of de-escalation. Despite the rhetoric, vessel movement through the Strait of Hormuz remains curtailed, and that prolonged disruption is what’s keeping oil risk premiums elevated,” said Phillip Nova’s senior market analyst Priyanka Sachdeva.
Shipping data continued to show strain in the region, with six Iranian oil tankers reportedly forced to reverse course due to the U.S. blockade.
However, a liquefied natural gas vessel operated by Abu Dhabi National Oil Co successfully passed through the Strait and was reportedly near India, according to tracking data released on Monday.
Before the U.S.-Israeli conflict with Iran began on February 28, between 125 and 140 vessels typically passed through the Strait each day.
Analysts believe elevated prices could persist. Suvro Sarkar, head of DBS Bank’s energy sector team, expects a shift from hopes of de-escalation to a prolonged ceasefire stalemate, with oil likely trading between $100 and $125 per barrel.
“With no immediate deal and an indefinite ceasefire providing no certainty on whether the Strait is open or closed, oil prices will trend higher as physical markets catch up with paper markets. Eventually, the conflict will become ’normalised’ in financial markets, leading to less volatility but a higher baseline,” he said in an email.
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