Brent futures rose by $1.40, or 1.5%, to $97.56 a barrel early Tuesday, following a significant drop in the previous session. This increase comes after the U.S. Central Command announced strikes on Iranian targets, including boats and missile sites, in response to threats against U.S. troops.
U.S. West Texas Intermediate crude was priced at $91.25, slightly up from Monday's last traded price but down by $5.30, or 5.5%, from Friday's close. The U.S. Memorial Day holiday on Monday meant there was no settlement. The military action by the U.S. follows reports of explosions in Iran's Bandar Abbas and nearby coastal areas, as Tehran continues to restrict non-Iranian shipping in the Gulf, affecting global oil and gas flows.
Iranian officials were in Doha for discussions with Qatar's prime minister about a potential agreement with the U.S. to end the ongoing conflict. Both nations reported progress on a memorandum of understanding aimed at halting the war and allowing 60 days for a final deal. A Middle East diplomatic source indicated that Iran might clear mines from the Strait of Hormuz within 30 days under the agreement.
“Traders are betting heavily that a breakthrough will finally free up the long-paralyzed tankers stuck in and around the Strait of Hormuz.”
Tim Waterer, chief market analyst at KCM Trade
Ship-tracking data revealed that three liquefied natural gas tankers recently navigated the strait, heading to Pakistan, China, and India, along with a supertanker carrying Iraqi crude to China after being stranded for nearly three months. The situation remains tense as U.S. President Donald Trump reiterated his demand for Iran to hand over its enriched uranium for destruction.
"Traders are betting heavily that a breakthrough will finally free up the long-paralyzed tankers stuck in and around the Strait of Hormuz," said Tim Waterer, chief market analyst at KCM Trade.
Background
The ongoing tensions in the Strait of Hormuz, a critical chokepoint for global oil transportation, have historically led to fluctuations in oil prices. The current conflict has already driven prices up by 50% or more, underscoring the region's significance in the global energy market.
Looking ahead, market participants will closely monitor the progress of U.S.-Iran negotiations and any developments regarding the clearance of mines in the Strait of Hormuz, as these factors will significantly impact oil prices and global supply chains.
