Oil prices pushed higher in early Asian trade on Tuesday as talks aimed at ending hostilities between the United States and Iran showed signs of fragility, keeping fears over supply disruptions alive.
Brent crude futures rose by 30 cents, or 0.29 percent, to $104.51 per barrel, and U.S. West Texas Intermediate gained 31 cents, or 0.32 percent, to $98.38 by 0002 GMT. Both benchmarks had climbed nearly 2.8 percent on Monday.
U.S. President Donald Trump described the ceasefire negotiations with Iran as "on life support," citing unresolved disagreements on several key demands. These demands include the cessation of hostilities on all fronts, removal of a U.S. naval blockade, resumption of Iranian oil sales, and compensation for war damage. Tehran has also stressed its sovereignty over the Strait of Hormuz, a chokepoint that handles roughly a fifth of global oil and liquefied natural gas flows.
Market analysts noted that insofar as talks remain inconclusive and physical shipments through the Strait of Hormuz continue to face restrictions, prices are likely to remain elevated. "As long as the US-Iran negotiations remain inconclusive and physical flows through the Strait of Hormuz stay restricted, we should see prices holding above $100," said Tim Waterer, chief market analyst at KCM Trade, in an email. He added that "a genuine breakthrough toward a peace deal could trigger a sharp $8–12 correction, while any escalation or renewed blockade threats would quickly push Brent back toward $115+."
Supply-side strain has already been visible. A recent Reuters survey found OPEC oil output in April fell to its lowest level in over two decades, reflecting production curbs and disruptions linked to the near-closure of the strait. Saudi Aramco Chief Executive Amin Nasser warned that interruptions to exports through the Strait of Hormuz could postpone a return to market stability until 2027, estimating a loss of about 100 million barrels of oil per week.
In a bid to temper market tightness, the U.S. administration announced plans to loan 53.3 million barrels of crude from the U.S. Strategic Petroleum Reserve (SPR). Ship-tracking information showed that one of those SPR shipments is en route to Turkey, marking the first such delivery to that Mediterranean nation.
At the same time, Washington imposed sanctions on three individuals and nine companies, including firms based in Hong Kong, the United Arab Emirates and Oman, for allegedly facilitating Iranian oil shipments to China. Separately, a report in the Wall Street Journal said the United Arab Emirates conducted military strikes on Iran, including an attack in early April that targeted a refinery on Iran's Lavan Island. The UAE has not publicly confirmed those strikes, the report said.
The combination of fragile diplomacy, constrained maritime flows and targeted policy actions is keeping traders focused on the near-term supply picture. Until there is clear progress in negotiations or a sustained restoration of physical flows through the Strait of Hormuz, oil markets are likely to remain sensitive to news that could either alleviate or exacerbate current disruptions.
Summary
Oil prices rose modestly in early Asian trade amid fragile U.S.-Iran negotiations and continued restrictions through the Strait of Hormuz. Market participants are watching U.S. SPR loans, reported sanctions and alleged military strikes for their potential to influence supply.
Key points
- Brent rose to $104.51 per barrel and U.S. WTI to $98.38, after both benchmarks gained nearly 2.8% on Monday - energy markets directly affected.
- Talks between Washington and Tehran remain fragile, with major sticking points including a naval blockade and resumption of Iranian oil sales - geopolitical risk impacting oil and shipping sectors.
- U.S. plans to loan 53.3 million barrels from the Strategic Petroleum Reserve and a shipment en route to Turkey are government responses aimed at easing market tightness - relevant to SPR policy and refining sectors.
Risks and uncertainties
- Continuing inconclusive negotiations could keep prices elevated above $100 - risk to oil-consuming industries and inflation-sensitive sectors.
- Further restrictions or a renewed blockade of the Strait of Hormuz could sharply tighten supply, pushing prices higher and disrupting maritime trade - impact on global shipping and energy-intensive manufacturing.
- Sanctions and reported military strikes create additional uncertainty around physical flows and trade channels - risk for trading firms, insurers and regional logistics.