Brent crude rose by 3 per cent on Tuesday after the U.S. military carried out strikes in Iran, adding to uncertainty over whether a deal will be imminently reached to end the war and open up shipping flows through the Strait of Hormuz.
U.S. Secretary of State Marco Rubio said on Tuesday that negotiating a deal with Iran could “take a few days,” quashing hopes for an imminent end to the conflict a day after U.S. forces conducted what Washington called 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.”
Global benchmark Brent was up US$2.95, or 3.07 per cent, to US$99.09 a barrel as of 9:13 a.m. ET, after settling 7 per cent lower on Monday. U.S. West Texas Intermediate was down US$3.78, or 3.91 per cent, from Friday’s close, at US$92.82. There was no WTI settlement on Monday due to the U.S. Memorial Day holiday.
“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.
Tehran has effectively halted nearly all non-Iranian shipping into and out of the Gulf via the Strait of Hormuz since the war began, choking off about a fifth of global oil and liquefied natural gas flows.
The strikes happened as Iran’s top negotiator and its foreign minister were in Doha for talks with Qatar’s prime minister on a potential deal with the U.S. to end the three-month-old war.
Both Washington and Tehran said they have made progress on a memorandum of understanding that would halt the war and give negotiators 60 days to reach a final deal.
Nikkei reported, citing a Middle East diplomatic source, that Iran would clear mines from the Strait within a 30‑day window under the agreement, after which vessels from all countries could navigate freely and safely, with Tehran also ending transit-fee collection.
Ship-tracking data showed that three LNG tankers passed through the Strait in recent days, heading to Pakistan, China and India, along with a supertanker carrying Iraqi crude to China that had been stranded for nearly three months.
U.S. President Donald Trump on Monday repeated his demand that Iran hand over its enriched uranium so it could be destroyed.
“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, a market analyst at IG.