Oil Prices Climb as Fragile Iran Talks Renew Supply Fears

Oil prices rose nearly one percent on Tuesday as uncertainty surrounding negotiations to end the conflict involving the United States, Israel and Iran continued to unsettle global energy markets, keeping concerns over crude supplies firmly in focus.

Brent Crude futures gained 86 cents, or 0.8 percent, to reach $105.07 a barrel during early trading, while West Texas Intermediate crude rose 99 cents, or 1 percent, to $99.06 per barrel. Both benchmarks had already posted gains of almost 2.8 percent on Monday.

Investors reacted cautiously after US President Donald Trump said the ceasefire discussions with Iran were “on life support,” citing major disagreements between Washington and Tehran.

According to Trump, sticking points in the negotiations include Iran’s demand for an end to hostilities across the region, the lifting of a US naval blockade, permission to fully resume Iranian oil exports and compensation for war-related damage.

Iran has also insisted on maintaining sovereignty over the Strait of Hormuz, one of the world’s most important energy corridors. Around one-fifth of global oil and liquefied natural gas shipments pass through the narrow waterway.

Analysts said fading hopes for a quick diplomatic breakthrough were supporting higher oil prices.

“Optimism regarding an imminent peace deal seems to be fading again,” said Suvro Sarkar, energy sector team lead at DBS Bank. He warned that if no agreement is reached by the end of May, oil markets could face renewed upward pressure.

The ongoing disruption around the Strait of Hormuz has already affected exports from major producers. A Reuters survey released Monday showed output from OPEC fell in April to its lowest level in more than 20 years as some producers cut shipments because of security concerns.

Tim Waterer, chief market analyst at KCM Trade, said oil prices could swing sharply depending on developments in the negotiations.

“A genuine breakthrough toward a peace deal could trigger a sharp correction,” he said, while warning that renewed threats to shipping through Hormuz could send Brent crude back above $115 a barrel.

Saudi Aramco chief executive Amin Nasser also warned Monday that prolonged disruptions in the Gulf could delay any return to normal market conditions until 2027. He estimated that around 100 million barrels of oil per week had been affected by interruptions linked to the conflict.

Elsewhere, traders were monitoring US supply data closely. Analysts surveyed by Reuters forecast that American crude inventories likely declined by about 1.7 million barrels last week, reflecting strong export demand.

Attention is also turning to Trump’s planned meeting with Chinese President Xi Jinping on Wednesday. The talks come shortly after Washington imposed sanctions on several individuals and companies accused of helping facilitate Iranian oil shipments to China, adding another layer of tension to already fragile global energy markets.