Oil prices advanced for a third consecutive session on Tuesday as fading hopes for an end to the Middle East conflict increased concerns that disruptions to regional energy supplies could persist.
Brent crude futures gained 35 cents, or 0.39%, to $91.22 a barrel by 0827 GMT, while U.S. West Texas Intermediate crude futures rose 81 cents, or 0.96%, to $85.31.
Both benchmarks were heading for a third straight daily increase. Brent touched its highest level since July 30 during the session, while WTI climbed to its strongest level since July 31.
“Sentiment remained supported by US President Donald Trump’s decision not to extend the US-Iran peace agreement and continued security concerns in the Strait of Hormuz,” ING analysts wrote in a note.
Peace Talks Stall as Iran Adopts More Aggressive Position
Progress towards a peace agreement and a resumption of normal tanker traffic through the Strait of Hormuz has stalled, raising the possibility that the conflict launched by the United States and Israel with attacks on Iran on February 28 could continue.
A senior Iranian official told Reuters on Monday that Iran would adopt a “fully offensive” military posture as attempts to secure a permanent end to the war remained deadlocked. Washington has also ruled out extending the temporary ceasefire agreement.
The increasingly uncertain diplomatic outlook is beginning to influence longer-term expectations for the oil market.
“The lack of any kind of deal will have an impact on oil price expectations further out in 4Q and even in 2027,” said DBS Bank’s head of energy research Suvro Sarkar.
Strait of Hormuz Security Risks Keep Supply Concerns Elevated
Security conditions in the Strait of Hormuz remain a major source of uncertainty for energy markets.
A projectile struck a vessel travelling out of the strait on Tuesday, marking the latest in a series of attacks that have kept the number of crossings in single digits, despite a modest improvement from weekend levels, according to tracking data.
The disruption has raised concerns over the reliability of crude exports through the strategically important waterway.
Saudi Aramco has resumed oil loadings from inside the Strait of Hormuz and is offering cargoes that can be loaded through ship-to-ship transfers off Fujairah in the UAE, providing an alternative mechanism for moving some supplies.
Analysts Warn Iran Could Further Restrict Oil Flows
The possibility of a more severe interruption remains an important risk for crude markets, particularly if tensions between Iran and the United States intensify further.
“It is probably in Iran’s power to fully halt the flow of oil out of the Strait of Hormuz whenever they find it suitable. Or they will soon have built the capability of that. Iran is for sure not just sitting still waiting for new US sanctions,” said SEB analyst Bjarne Schieldrop.
Iran has separately been negotiating with Oman over an agreement for managing the Strait of Hormuz and has said the two sides are close to reaching a deal.
However, Trump responded to those discussions by threatening to bomb Oman, despite the Gulf state’s longstanding security relationship with the United States.
Red Sea Tensions Add Another Risk for Shipping
Geopolitical risks are also increasing elsewhere in the Middle East.
Yemen’s Houthis launched missiles at vessels they described as a Saudi military ship and four escort vessels in the Red Sea, according to military spokesperson Yahya Saree in a statement posted on Telegram.
The combination of continued disruption around the Strait of Hormuz and renewed security risks in the Red Sea is keeping attention firmly on the vulnerability of key Middle Eastern shipping routes.
With diplomatic progress stalled and oil flows remaining exposed to military disruption, traders are increasingly considering the possibility that geopolitical risk premiums could remain embedded in crude prices well beyond the current quarter.