Brent, US WTI crude futures hit highest since end July as US-Iran peace deal fades
NEW YORK:
Oil prices inched up on Tuesday, marking a third day of gains, as Iran said it would adopt a more offensive stance and the Strait of Hormuz would remain closed, and Washington ruled out extending a ceasefire.
Brent crude futures were up 59 cents, or 0.7%, at $91.46 a barrel at 1631 GMT. US West Texas Intermediate crude futures were up 75 cents, or 0.9%, at $85.25 a barrel. The contracts traded at their highest in three weeks earlier in the session. Progress on peace talks and the resumption of oil tanker traffic through the strategic Strait of Hormuz appear to have halted, threatening to extend the conflict that the US and Israel launched with attacks on Iran on February 28.
Iran will keep the strait closed until the US meets the conditions of the interim deal signed in June, top Iranian negotiator Mohammad Baqer Qalibaf said in comments published by state media on Tuesday.
Trump, who previously labelled that deal “over,” said on Tuesday that talks between Washington and Tehran were neither taking place nor scheduled, but the Strait of Hormuz was open. His comments were met with a muted market reaction. “What you are seeing today is headline fatigue. Trump saying there are no talks does not change the physical setup at all, since there were no real talks in the first place and the physical stack has not materially changed in two weeks,” Tracy Shuchart, Senior Economist at NinjaTrader, said.
Qalibaf’s comments came after a senior Iranian official told Reuters on Monday that Iran will shift to a “fully offensive” military posture as efforts have stalled towards a permanent end to the war. “It is probably in Iran’s power to fully halt the flow of oil out of the Strait of Hormuz whenever they find it suitable,” said SEB analyst Bjarne Schieldrop.
Iran has separately been negotiating with Oman on an agreement on managing the Strait of Hormuz and says they are close to a deal. But Trump responded to those talks with a threat to bomb Oman, a longstanding US security partner.
