Oil prices pushed higher on Tuesday, as lingering doubts over whether Washington and Tehran can finalize a peace agreement outweighed early signs that shipping traffic through the Strait of Hormuz was beginning to normalize.
Brent crude futures climbed $1.02, or 1.42%, to $73.01 a barrel, while U.S. West Texas Intermediate gained 93 cents, or 1.36%, to reach $69.48 a barrel, according to prices recorded at 0748 GMT.
Market watchers pointed to the fragile state of negotiations as the primary driver behind the uptick. Saxo Bank’s head of commodity strategy, Ole Hansen, noted that with no signed agreement yet in place, the risk of setbacks remains real and that inflammatory remarks from either side have been enough to stoke uncertainty.
That nervousness, he suggested, has had the effect of pulling market attention away from worries about an oversupplied crude market that had been weighing on prices in recent weeks.
The diplomatic backdrop turned tenser on Tuesday when Iran’s foreign minister warned that a final settlement between the two countries would collapse entirely if American pressure tactics persisted.
The remarks came in direct response to President Donald Trump, who had vowed to complete military action against Iran should no deal be reached, language that appeared to unsettle both Tehran and the markets tracking the standoff.
Hansen framed the price trajectory in terms of key technical thresholds, suggesting that renewed hostilities could push Brent toward $75 a barrel in the near term, with $80 as the next marker beyond that.
At the center of investor anxiety is the Strait of Hormuz, the narrow waterway separating Iran from Oman that, before the outbreak of war between Iran and the U.S.-Israel coalition at the end of February, handled roughly a fifth of the world’s daily oil and liquefied natural gas trade. The corridor has been a recurring casualty of the conflict, with Iranian forces periodically restricting or attacking vessels attempting to pass through.
Underscoring those risks, Axios reported on Monday, citing two U.S. officials, that Iran’s Revolutionary Guards had launched at least two missiles at commercial vessels transiting the strait. The strikes reportedly caused substantial damage to the ships involved, though no casualties were reported.
Despite the attack, there were tentative signs of a thaw in maritime traffic. Shipping data showed Japanese-owned supertankers loaded with Saudi Arabian crude setting course for the strait on Tuesday, exiting the Gulf and joining a separate group of vessels that had been stranded before departing a day earlier.
Even so, analysts cautioned that the pace of recovery remains sluggish. ANZ noted that the early bounce in tanker crossings has lost momentum, with the number of vessels transiting the strait still in the single digits and no clear, sustained upswing yet visible.
The prolonged disruption has also pushed Saudi Arabia to explore ways of reducing its reliance on the strait altogether.
Five sources familiar with the matter said the kingdom is weighing an expansion of its crude pipeline network to the Red Sea coast in the west, a move that would allow Saudi Arabia, and potentially neighboring producers, to route oil to international markets without passing through Hormuz at all.
The kingdom has also been adjusting its pricing strategy to stay competitive amid the disruption. Saudi Arabia recently slashed the price of its crude sold into Asia by the widest margin in more than 20 years, though the discounted barrels still trade at a premium to some competing Gulf grades.
WHAT YOU SHOULD KNOW
Oil prices are being driven less by supply-and-demand fundamentals and more by diplomatic uncertainty.
Until the U.S. and Iran actually sign a deal, every threat or hardline comment from either side can spike prices and the Strait of Hormuz, despite tentative signs of reopening, is still nowhere near normal traffic.
