Oil prices moved higher on Tuesday as uncertainty surrounding the Middle East conflict continued to cloud prospects for a quick resolution. Brent crude crossed the $90-a-barrel threshold after Iran indicated a tougher military approach and the US ruled out extending the temporary ceasefire.
WTI crude was trading at $85.28 a barrel, up 0.92%. It had earlier climbed more than 1% to $85.37, its highest level since July 31. Brent crude rose 0.75%, to $91.55 a barrel, after touching its highest level since July 30 on Monday.
Strait of Hormuz emerges as key concern
Expectations of renewed peace negotiations and a restoration of normal tanker movement through the Strait of Hormuz have weakened. A senior Iranian official reportedly said Tehran would adopt a "fully offensive" military posture after efforts to negotiate a permanent end to the conflict stalled.
Washington has also rejected the possibility of extending the temporary ceasefire, increasing uncertainty over the duration and potential economic impact of the conflict.
The disruption to shipping through the strategic waterway is becoming increasingly apparent. Data from Kpler showed only five commodity vessels crossed the Strait of Hormuz on Saturday following attacks on tankers, while no vessels were recorded passing through on Sunday. This compared with 31 vessels during the previous weekend.
Tensions spread beyond the Gulf
The conflict-related risks have also extended to the Red Sea, where Yemen's Houthis claimed to have attacked a Saudi military vessel and four escort ships using missiles.
Meanwhile, Iran has been conducting separate discussions with Oman concerning arrangements for managing traffic through the Strait of Hormuz. Tehran indicated that the two sides were close to reaching an agreement.
The diplomatic situation remains fluid. US President Donald Trump reportedly threatened military action against Oman, despite the country's longstanding security relationship with Washington.
There were, however, indications that diplomatic channels could remain open. Media reports suggested Trump had begun back-channel discussions with representatives of Iran's Islamic Revolutionary Guard Corps.
For oil markets, the combination of uncertain diplomacy, military escalation and reduced tanker traffic has kept traders focused on the possibility of further disruptions to global crude supplies.
