Crude oil prices extended their increase on Tuesday as hopes of a deal in the Middle East receded and uncertainty over the reopening of the Strait of Hormuz persisted.
While Iran-Oman talks on shipping arrangements continue, any full reopening remains contingent on a broader US-Iran accord.
The lack of clarity over the possibility of a full reopening of the waterway could leave oil prices exposed to the upside at a time when the market remains tight.
US President Donald Trump’s hardened stance and compensation demands clouded near-term prospects for an agreement, keeping markets alert to prolonged supply risks. At the same time, ongoing threats to shipping fuel concerns about additional disruptions, while global inventories have little spare capacity to absorb further supply shortfalls.
Looking ahead, oil prices could remain sensitive to any developments in the geopolitical situation in the Middle East and could react rapidly to any diplomatic progress. As such, any additional setbacks could drive oil prices further up.
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