Global oil prices moved sharply higher on Tuesday after new U.S. military strikes in Iran increased uncertainty over whether a near-term agreement can be reached to end the conflict and restore shipping activity through the Strait of Hormuz.
U.S. Secretary of State Marco Rubio said on Tuesday that securing a deal with Iran could “take a few days,” dampening hopes for a rapid resolution a day after Washington carried out what it described as defensive strikes in southern Iran.
“We are still waiting for more details on a potential deal,” said Giovanni Staunovo at UBS. “Meanwhile we see renewed tensions in the Middle East, while flows through the Strait remain restricted.”
Brent rebounds sharply after previous session selloff
Brent crude, the global benchmark, climbed $3.04, or 3.2%, to $99.18 per barrel by 08:20 GMT after falling 7% in the previous session.
U.S. West Texas Intermediate crude traded at $92.53 a barrel, down $4.07, or 4.2%, from Friday’s close. There was no official WTI settlement on Monday due to the U.S. Memorial Day holiday.
Markets monitor Doha negotiations and Strait of Hormuz disruption
“While differences between the parties have narrowed, any eventual peace deal would likely lead only to a gradual reopening, meaning the current tight supply outlook could take months to normalize,” said Ole Hansen at Saxo Bank.
Since the conflict began, Tehran has effectively blocked almost all non-Iranian shipping traffic entering and leaving the Gulf through the Strait of Hormuz, disrupting around one-fifth of global oil and liquefied natural gas supplies.
The latest military strikes occurred while Iran’s lead negotiator and foreign minister were in Doha holding discussions with Qatar’s prime minister regarding a potential agreement with the United States aimed at ending the three-month conflict.
Both Washington and Tehran have indicated that progress has been made on a memorandum of understanding designed to halt the fighting and provide negotiators with 60 days to finalize a broader agreement.
Reports suggest shipping routes could reopen gradually
Japanese publication Nikkei, citing a Middle Eastern diplomatic source, reported that Iran would remove mines from the Strait of Hormuz within 30 days under the proposed agreement.
The report added that vessels from all nations would subsequently be permitted to pass through the waterway freely and safely, while Iran would also stop charging transit fees.
Shipping data showed that three LNG tankers recently crossed the Strait en route to Pakistan, China and India. A supertanker carrying Iraqi crude oil to China, stranded for nearly three months, also resumed passage.
Trump warns agreement could still collapse
U.S. President Donald Trump reiterated on Monday his demand that Iran surrender its enriched uranium stockpile for destruction.
“It’s a sharp reminder that the deal could still collapse at the 11th hour, much like the five previous attempts before it,” said Tony Sycamore, market analyst at IG Group.