Oil prices moved higher on Tuesday after fresh doubts emerged over a possible ceasefire between the US, Israel and Iran, keeping traders worried about global supply disruptions.
Brent crude rose 86 cents, or 0.8 percent, to $105.07 a barrel, while US West Texas Intermediate crude gained 99 cents, or 1 percent, to $99.06 a barrel during early trading hours. Both benchmark contracts had already jumped nearly 2.8 percent in the previous session.
The market reacted to signs that efforts to end the conflict were facing major hurdles. US President Donald Trump said on Monday that a ceasefire with Iran was “on life support”, pointing to disagreements over key issues.
According to Trump, the sticking points include demands linked to ending military action across all fronts, lifting a US naval blockade, restarting Iranian oil exports and compensation for war-related damage.
Iran also repeated its position on control over the Strait of Hormuz, a critical shipping route that handles nearly one fifth of the world’s oil and liquefied natural gas supplies. Any threat to traffic through the strait is closely watched by energy markets because it can quickly affect global fuel supplies and prices.
Analysts said fading hopes of a quick peace deal were pushing traders back into risk mode.
Suvro Sarkar, who leads the energy sector team at DBS Bank, said market optimism over an immediate agreement appeared to be weakening again. He warned that if no breakthrough is reached by the end of May, oil prices could continue moving higher.
Supply concerns have already increased after disruptions near the Strait of Hormuz forced some producers to reduce exports. A Reuters survey released on Monday showed OPEC oil production in April fell to its lowest level in more than two decades.
Tim Waterer, chief market analyst at KCM Trade, said a genuine peace agreement could trigger a sharp fall of $8 to $12 in oil prices. However, he added that any renewed tensions or blockade threats could quickly push Brent crude back above $115 a barrel.
Fresh warnings also came from Saudi Aramco chief executive Amin Nasser, who said disruptions through the Strait of Hormuz could delay stability in global oil markets until 2027. He estimated that around 100 million barrels of oil per week could be affected if shipping problems continue.
Meanwhile, traders were also monitoring supply data from the US. Analysts surveyed by Reuters expect US crude inventories to have fallen by around 1.7 million barrels last week.
Walt Chancellor, an energy strategist at Macquarie Group, said the expected decline reflects strong export demand for both crude oil and refined products in recent weeks.
Investors are now also watching a planned meeting between Trump and Chinese President Xi Jinping on Wednesday. The talks come shortly after Washington imposed sanctions on individuals and companies accused of helping Iranian oil shipments reach China.
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