Oil prices rose for the fifth consecutive day due to concerns surrounding the US-Iran agreement
Oil prices rose again on Tuesday, continuing a three-day streak of gains, following Iran's decision to adopt a more aggressive position by keeping the Strait of Hormuz closed. In contrast, the U.S. dismissed the possibility of extending a ceasefire.
Brent crude futures increased by 15 cents to close at $91.02 per barrel, while U.S. West Texas Intermediate crude futures gained 44 cents, ending the day at $84.94 per barrel. Earlier in the session, both benchmarks reached three-week highs.
Peace talks and efforts to resume oil tanker traffic through the vital Strait of Hormuz have stagnated, raising concerns about a prolonged conflict sparked by U.S. and Israeli attacks on Iran that began on February 28.
Iran's top negotiator, Mohammad Baqer Qalibaf, stated in comments published by state media that the strait would remain closed until the U.S. adheres to the terms of an interim agreement reached in June.
Former President Trump, who had previously dismissed the agreement as "over," noted on Tuesday that there were no active or planned discussions between Washington and Tehran but claimed the Strait of Hormuz was still open. His comments had minimal effect on market activity.
Tracy Shuchart, a senior economist at NinjaTrader, commented, "The market reaction today indicates headline fatigue. Trump's remarks about the absence of talks don't change the physical situation, as no significant negotiations were occurring anyway, and conditions have remained unchanged for weeks."
Qalibaf's comments came after a senior Iranian official told Reuters on Monday that Iran intended to pursue a "fully offensive" military approach due to delays in reaching a permanent resolution to the conflict.
Today, oil prices increased
Mohit Kumar, an economist at Jefferies, observed that neither Iran nor the U.S. appears ready to compromise. "Consequently, we expect ongoing challenges in the near term and increased pressure on oil prices," he remarked.
Despite the closure of the strait, some oil still manages to pass through Hormuz in limited quantities. Saudi Aramco has resumed oil loadings within the strait and is offering cargo transfers via ship-to-ship operations off Fujairah in the UAE.
"It seems Iran can stop the oil flow through Hormuz completely if they decide to," commented SEB analyst Bjarne Schieldrop.
Iran is also in discussions with Oman about managing the Strait of Hormuz and is reportedly close to reaching an agreement. However, Trump responded to these talks with a threat against Oman, despite its long-standing security partnership with the U.S.
In other regional news, Yemen's Houthis fired missiles at what they claimed was a Saudi military ship and four escorts in the Red Sea, according to their military spokesperson Yahya Saree on Telegram.
Later, the United Arab Emirates issued an alert on X about detecting a missile threat through its air defense systems, but later informed people via phone alert that it was safe to resume normal activities.
This morning, crude oil prices rose as investors assessed the latest developments in the Middle East
Oil prices increased
Investors are now paying close attention to the evolving situation between the United States and Iran. Today, the Energy Information Administration (EIA) is scheduled to release data on U.S. crude oil inventories at 18:30 UAE time. It is anticipated that U.S. crude oil stockpiles will have decreased by 500,000 barrels over the past week. This comes after a previous increase of 2.479 million barrels, which had brought the total to 407 million barrels by the week ending July 31. Analysts also expect a reduction of 1.58 million barrels in gasoline inventories and a 1.6-million-barrel decline in distillate stocks during this period.