Energy markets saw continued upward pressure Tuesday as diplomatic solutions to the U.S.-Iran conflict remain elusive, leaving the vital Strait of Hormuz shipping channel mostly blocked and preventing Middle Eastern oil supplies from reaching international markets.
According to a U.S. official speaking Monday, President Donald Trump has rejected Iran’s most recent peace proposal. Iranian sources revealed Monday that Tehran’s offer deliberately sidestepped nuclear program discussions until fighting ends and Persian Gulf maritime disputes get resolved.
Trump’s rejection of Iran’s terms has created a diplomatic impasse, with Iran maintaining its closure of Strait of Hormuz shipping traffic—normally responsible for transporting approximately 20% of worldwide oil and natural gas consumption—while the U.S. continues its naval blockade of Iranian harbors.
June Brent crude contracts increased 45 cents, or 0.4%, reaching $108.68 per barrel by 0051 GMT, following Monday’s 2.8% surge to the highest closing price since April 7. The commodity has now posted gains for seven consecutive trading days.
June U.S. West Texas Intermediate crude jumped 58 cents, or 0.6%, to $96.96, after Monday’s 2.1% increase.
Previous diplomatic discussions between Washington and Tehran broke down last week when direct negotiations failed to produce results.
“For oil traders, it’s not the rhetoric that matters any more, but the actual physical flow of crude oil through the Strait of Hormuz, and right now, that flow remains constrained,” said Fawad Razaqzada, a market analyst at City Index and FOREX.com.
Razaqzada noted that even with a potential agreement, production shutdowns and supply chain complications could require months for full recovery.
Maritime tracking information confirmed major regional disruptions, showing six Iranian oil vessels were compelled to reverse course because of the American blockade.
Despite the restrictions, one liquefied natural gas vessel operated by the United Arab Emirates’ Abu Dhabi National Oil Company successfully navigated through the Strait of Hormuz and appears to be approaching India, according to Monday’s ship-tracking data.
Before the U.S.-Israeli military action against Iran commenced on February 28, daily vessel traffic through the strait typically ranged between 125 and 140 ships.
