Oil Surges as US-Iran Deadlock Keeps Strait of Hormuz Disrupted

Oil prices climbed nearly 2 percent on Tuesday, extending a strong rally as the conflict between the United States and Iran showed no sign of easing, with shipping through the Strait of Hormuz still heavily disrupted.

Brent crude rose $2.32, or 2.1 percent, to $110.55 a barrel by mid-morning in Saudi Arabia, after closing 2.8 percent higher in the previous session. US West Texas Intermediate crude gained $1.80, or 1.9 percent, to $98.17 a barrel, building on Monday’s 2.1 percent advance.

The latest gains reflect growing concern over supply disruptions from the Middle East, particularly as the Strait of Hormuz remains largely inaccessible. The narrow waterway is one of the world’s most important energy routes, carrying around one-fifth of global oil and gas consumption.

Efforts to end the conflict have so far failed to produce a breakthrough. A US official said President Donald Trump was dissatisfied with Iran’s latest proposal aimed at ending hostilities. According to Iranian sources, Tehran’s offer did not address its nuclear programme, instead insisting that discussions on the issue would only begin after fighting stops and disputes over Gulf shipping are resolved.

That response has left negotiations at an impasse. Iran continues to restrict shipping through the Strait of Hormuz, while the United States maintains its blockade of Iranian ports. An earlier round of direct talks collapsed last week without agreement.

Market analysts say the lack of tangible progress is keeping traders on edge.

“Talks of peace remain largely rhetorical at this stage,” said Priyanka Sachdeva, senior market analyst at Phillip Nova. “There is little concrete evidence of de-escalation, and vessel movement through the Strait of Hormuz remains severely limited. That ongoing disruption is sustaining a significant risk premium in oil prices.”

Shipping data underscores the scale of the disruption. Six Iranian oil tankers were reportedly forced to turn back after encountering the US naval blockade. Before the conflict began in late February, between 125 and 140 vessels passed through the strait each day.

Not all maritime traffic has halted. A liquefied natural gas tanker operated by Abu Dhabi National Oil Co. successfully transited the waterway and was reported to be heading toward India on Monday, suggesting that some shipments are still moving under tight conditions.

Analysts increasingly believe elevated oil prices may persist. Suvro Sarkar, who leads the energy sector team at DBS Bank, said markets are shifting from hopes of a quick resolution to expectations of a prolonged period of uncertainty.

He forecast Brent crude could trade between $100 and $125 a barrel in the near term, as traders adjust to a new reality shaped by geopolitical instability.

With no immediate settlement in sight, the energy market appears set for continued volatility, even as higher prices begin to look like the new normal.