LONDON – Oil prices rose after steep falls in the previous session as shipping through the Strait of Hormuz remained constrained, outweighing expectations of renewed US-Iran talks aimed at ending the war in the Middle East.
Forty-five days after Iran’s Revolutionary Guards declared the strait closed, effectively shutting in about 20% of global oil and liquefied natural gas shipments, transit through the waterway remains uncertain despite a two-week ceasefire. Traffic is at only a fraction of the 130-plus daily crossings seen before the war, sources said on Tuesday.
Brent crude futures were up 71 cents, or 0.8%, to $95.50 a barrel at 1158 GMT, after falling 4.6% in the previous session. US West Texas Intermediate crude was up 50 cents, or 0.6%, to $91.78. The contract dropped 7.9% the session before.
Stock indices rallied on Tuesday on increasing optimism about the prospects for a resolution of the conflict, with the S&P 500 hitting close to its record closing high.
US President Donald Trump said talks with Tehran on ending the war could resume this week after ending over the weekend without any agreement. But the U.S. has also enacted a blockade of shipping leaving Iranian ports that its military said on Wednesday has completely halted trade going in and out of the country by sea.
Prices pared some gains after Trump said China and the United States are working together and that Beijing is happy that he is opening the Strait of Hormuz.
“Even if there’s a breakthrough this week and the Strait of Hormuz reopens relatively quickly, supply snarl-ups for a range of essential commodities from oil and gas, fertiliser and helium are likely to take considerable time to unwind,” said Susannah Streeter, chief investment strategist at Wealth Club.
Refiners are desperately seeking alternative crude supply, pushing up the premiums they are willing to pay for oil from areas such as the U.S. Gulf Coast and North Sea. A cargo of WTI Midland for delivery to Rotterdam traded at a record premium of $22.80 a barrel above benchmark European prices on Tuesday.
A US destroyer stopped two oil tankers from leaving Iran on Tuesday, a U.S. official said.
“The Strait of Hormuz is not Trump’s alone to reopen,” said SEB analyst Ole Hvalbye.
“Iran has its own calculus, and the regime may find it strategically useful to keep flows restricted even after any peace deal, whether to extract reparations, guarantee security, or simply to inflict political pain ahead of the November US midterm elections.”
The market stands to lose some access to further supply after two U.S. administration officials told Reuters on Tuesday the US will not renew a 30-day waiver of sanctions on Iranian oil at sea that expires this week and quietly let a similar sanctions waiver for Russian oil expire over the weekend.
Later in the day, markets will be watching for official US inventory data from the Energy Information Administration, due at 4.30pm.
US crude oil stockpiles were expected to have risen slightly last week, while distillate and gasoline inventories likely fell, a Reuters poll showed.
Market sources familiar with American Petroleum Institute figures said on Tuesday U.S. crude oil inventories jumped for a third straight week.
- Oil prices rose after previous steep declines due to continued constrained shipping through the Strait of Hormuz, despite expectations of renewed US-Iran talks.
- The Strait of Hormuz, closed by Iran's Revolutionary Guards 45 days ago, is still operating at a fraction of normal traffic levels, disrupting about 20% of global oil and LNG shipments.
- US President Trump indicated potential resumption of talks with Iran this week, but the US blockade has halted maritime trade to and from Iran, keeping tensions high.
- Refiners are paying higher premiums for alternative crude supplies from the US Gulf Coast and North Sea, while US sanctions waivers on Iranian and Russian oil are expiring.
- Market uncertainty persists, with expectations of slight rises in US crude inventories and declines in distillate and gasoline stocks, amid ongoing geopolitical risks and shipping disruptions.
LONDON - Oil prices rose after steep falls in the previous session as shipping through the Strait of Hormuz remained constrained, outweighing expectations of renewed US-Iran talks aimed at ending the war in the
Forty-five days after Iran's Revolutionary Guards declared the strait closed, effectively shutting in about 20% of global oil and liquefied natural gas shipments, transit through the waterway remains uncertain despite a two-week ceasefire. Traffic is at only a fraction of the 130-plus daily crossings seen before the war, sources said on Tuesday.
Brent crude futures were up 71 cents, or 0.8%, to $95.50 a barrel at 1158 GMT, after falling 4.6% in the previous session. US West Texas Intermediate crude was up 50 cents, or 0.6%, to $91.78.
Stock indices rallied on Tuesday on increasing optimism about the prospects for a resolution of the conflict, with the S&P 500 hitting close to its record closing high.
US President Donald Trump said talks with Tehran on ending the war could resume this week after ending over the weekend without any agreement. But the U.S. has also enacted a blockade of shipping leaving Iranian ports that its military said on Wednesday has completely halted trade going in and out of the country by sea.
Prices pared some gains after Trump said China and the United States are working together and that
"Even if there’s a breakthrough this week and the Strait of Hormuz reopens relatively quickly, supply snarl-ups for a range of essential commodities from oil and gas, fertiliser and helium are likely to take considerable time to unwind," said Susannah Streeter, chief investment strategist at
Refiners are desperately seeking alternative crude supply, pushing up the premiums they are willing to pay for oil from areas such as the U.S. Gulf Coast and
A US destroyer stopped two oil tankers from leaving Iran on Tuesday, a U.S. official said.
"
"Iran has its own calculus, and the regime may find it strategically useful to keep flows restricted even after any peace deal, whether to extract reparations, guarantee security, or simply to inflict political pain ahead of the
Later in the day, markets will be watching for official US inventory data from the Energy Information Administration, due at 4.30pm.
US crude oil stockpiles were expected to have risen slightly last week, while distillate and gasoline inventories likely fell, a Reuters poll showed.
Market sources familiar with American Petroleum Institute figures said on Tuesday U.S. crude oil inventories jumped for a third straight week.
