Oil Prices Surge as Middle East Peace Talks Stall and Iran Threatens Strait of Hormuz Closure
Oil prices rose for a third consecutive session on Tuesday, reaching their highest levels in nearly three weeks. The climb came as prospects for a peace deal in the Middle East faded, with Iran signaling a more aggressive military stance and the U.S. refusing to extend a ceasefire agreement. Brent crude futures gained 20 cents, or 0.22%, to $91.07 per barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 49 cents, or 0.58%, to $84.99 per barrel. Both benchmarks hit their highest points since late July.
The uncertainty over a deal to end the conflict has heightened concerns about prolonged disruptions to oil supplies. Analysts noted that U.S. President Donald Trump’s decision not to extend the U.S.-Iran peace agreement, along with ongoing security risks in the Strait of Hormuz, continued to support oil prices. Iran has stated it will keep the Strait of Hormuz closed until the U.S. meets the conditions of an interim deal signed in June, which Trump previously dismissed as “over.”
Iranian officials have indicated a shift to a “fully offensive” military posture, further complicating efforts to resolve the conflict. Meanwhile, Saudi Aramco has resumed oil loadings within the Strait of Hormuz, though crossings remain minimal. Analysts suggest Iran retains the capability to fully halt oil flow through the strait if necessary. Additionally, Yemen’s Houthis launched missile attacks on vessels in the Red Sea, escalating regional tensions.
The lack of progress in peace talks has led analysts to predict sustained pressure on oil prices, with potential impacts extending into late 2024 and beyond. DBS Bank’s head of energy research, Suvro Sarkar, noted that the absence of a deal will influence oil price expectations in the coming quarters.