Oil Prices Surge as US-Iran Diplomatic Efforts Stall

Oil prices rose on Tuesday as conflicting statements from the US and Iran over diplomatic efforts to end the conflict and reopen the Strait of Hormuz kept supply concerns in global oil markets elevated.

Diplomatic contacts continued with mediators pressing Iran to make concessions on its nuclear program in an effort to revive ceasefire negotiations with the US, according to The Wall Street Journal. A possible agreement between the two countries has been a topic of discussion, but uncertainty over the reopening of the Strait of Hormuz keeps supply risks in focus.

The initiative follows US President Donald Trump's rejection of an Iranian proposal for a seven-day ceasefire that would have included the reopening of the Strait of Hormuz and an end to the US blockade of Iranian ports. A US official told American news outlets Axios and CNN that Trump is willing to offer economic sanctions relief and release frozen funds to Iran in exchange for concrete progress related to its nuclear program.

The US is engaging in 'positive and constructive' talks via mediators, according to a US official, emphasizing that negotiators would not finalize an agreement unless nuclear-related concerns were fully resolved. Iranian Foreign Minister Abbas Araghchi said Qatari mediators will present the US with new ideas discussed with Tehran on how to meet Iran's conditions for reopening Hormuz.

Oil prices saw an increase as international benchmark Brent crude futures for December delivery rose 1.6% to $99.42 per barrel, while US benchmark West Texas Intermediate (WTI) crude futures for November delivery gained 1.5% to $94 per barrel.