Oil prices moved higher on Tuesday as renewed military action in Iran unsettled markets and kept uncertainty around key shipping routes in focus.
Brent crude rose more than 2 percent during early Asian trading, recovering after a sharp fall in the previous session. It gained $1.98 to reach $98.12 per barrel by 0405 GMT, following a 7 percent drop a day earlier.
US West Texas Intermediate crude traded at $91.79 per barrel. While slightly higher from Monday’s last traded level, it remained about 5 percent lower compared to Friday’s close, with no official settlement recorded due to the Memorial Day holiday in the US.
Tensions cloud hopes of quick deal
Markets had briefly shown signs of calm overnight on expectations of a possible agreement between Washington and Tehran. However, those hopes weakened after the US carried out what it described as defensive strikes in southern Iran, alongside Israeli attacks targeting Hezbollah.
Analysts said these developments pushed Brent prices higher again and widened the gap between global and US benchmarks.
US Secretary of State Marco Rubio said negotiations with Iran could take “a few days”, suggesting that a quick resolution to the conflict remains unlikely.
The conflict has already disrupted shipping through the Strait of Hormuz, a key route that handles around one fifth of global oil and liquefied natural gas supplies. Since fighting began, Iran has effectively limited the movement of foreign vessels through the passage, tightening global energy supply.
Talks continue but risks remain
Diplomatic efforts are ongoing, with Iran’s senior negotiator and foreign minister holding talks in Doha with Qatar’s leadership. Both sides have indicated some progress towards a preliminary understanding that could pause the conflict and allow up to 60 days for a final deal.
Reports suggest Iran may agree to clear naval mines from the strait within 30 days under a proposed arrangement, potentially allowing safe passage for ships from all countries and removing transit charges.
Some early movement has already been observed. Ship tracking data shows a small number of liquefied natural gas vessels recently passed through the strait, heading towards Pakistan, China and India. A large tanker carrying Iraqi crude also resumed its journey after being held up for nearly three months.
Still, uncertainty remains high. US President Donald Trump has repeated calls for Iran to surrender its enriched uranium, a demand that could complicate negotiations.
Market watchers warn that while traders are hopeful of a breakthrough, past failed attempts highlight how fragile the situation remains. Any setback in talks could quickly push prices higher again, especially if supply routes stay restricted.
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