Oil prices continued their upward trajectory on Tuesday, building on gains from the previous session as market sentiment remained cautious due to stalled peace efforts between the United States and Iran. The Middle East conflict, now entering its second month, has significantly disrupted the strategic Strait of Hormuz, limiting global oil flows.
West Texas Intermediate (WTI) crude was trading at $97.31 per barrel, up $0.94 or 0.98%, while Brent crude stood at $109.3, higher by $1.05 or 0.97%, as of the latest update. The rally gained momentum on Monday, when crude prices surged approximately 3% to hit a two-week high. Brent futures settled at $108.23 a barrel, rising $2.90 or 2.8%, and US WTI closed at $96.37, up $1.97 or 2.1%.
The price surge came as peace talks between the US and Iran lost traction, and shipping activity through the Strait of Hormuz remained under pressure, tightening global energy supplies. Sentiment in energy markets was further influenced by diplomatic developments. Over the weekend, expectations of progress weakened after US President Donald Trump canceled a planned Islamabad visit by his envoys Steve Witkoff and Jared Kushner. This occurred as Iranian Foreign Minister Abbas Araqchi had already reached Pakistan, adding uncertainty to negotiations.
Tensions surrounding the broader US-Iran dialogue have continued to guide investor sentiment, with attention also on geopolitical risks involving Israel and Lebanon. At the same time, global markets were awaiting policy signals from major central banks, including the US Federal Reserve, the European Central Bank, and the Bank of Japan.
The situation around the Strait of Hormuz remains a key driver of oil market volatility. Following the breakdown in diplomatic momentum, Iran has maintained restrictions on shipping through the strategic waterway, while the United States continues its blockade of Iranian ports. The Strait, which typically handles cargo equivalent to about 20% of global oil and gas consumption, has seen disrupted movement, further tightening supply chains. Iran has insisted that vessels must obtain its approval before passing through the Strait, while Trump has stated that the United States has "total control" over the route. The US Navy has also sustained its blockade of Iranian ports and vessels.
Analysts expect continued volatility in oil markets as geopolitical tensions persist and supply disruptions remain in focus. The combination of stalled diplomacy and physical constraints on shipping through the Strait of Hormuz suggests that crude prices could stay elevated in the near term.
