Brent crude futures gained 15 cents to close at $91.02 a barrel. U.S. West Texas Intermediate crude futures advanced 44 cents to settle at $84.94 a barrel. The contracts traded at their highest in three weeks earlier in the session.
Progress on peace talks and the resumption of oil tanker traffic through the strategic Strait of Hormuz appear to have halted, threatening to extend the conflict that the U.S. and Israel launched with attacks on Iran on February 28.
Iran will keep the strait closed until the U.S. meets the conditions of the interim deal signed in June, top Iranian negotiator Mohammad Baqer Qalibaf said in comments published by state media on Tuesday.
Trump, who previously labeled that deal “over,” said on Tuesday that talks between Washington and Tehran were neither taking place nor scheduled, but the Strait of Hormuz was open. His comments were met with a muted market reaction.
“What you are seeing today is headline fatigue. Trump saying there are no talks does not change the physical setup at all, since there were no real talks in the first place and the physical stack has not materially changed in two weeks,” Tracy Shuchart, senior economist at NinjaTrader, said.
Qalibaf’s comments came after a senior Iranian official told Reuters on Monday that Iran will shift to a “fully offensive” military posture as efforts have stalled towards a permanent end to the war.
Mohit Kumar, an economist at brokerage Jefferies, said the two countries are not yet at the pain points where either Iran or the U.S. would want to make a deal.
“Hence, we see further pain in the near term and upward pressure on oil prices,” Kumar said.
Some oil is escaping Hormuz however, though crossings are in the single digits. Saudi Aramco has resumed oil loadings from inside the Strait of Hormuz, and is offering cargoes for loading via ship-to-ship transfers off Fujairah in the UAE.
“It is probably in Iran’s power to fully halt the flow of oil out of the Strait of Hormuz whenever they find it suitable,” said SEB analyst Bjarne Schieldrop.
Iran has separately been negotiating with Oman on an agreement on managing the Strait of Hormuz and says they are close to a deal. But Trump responded to those talks with a threat to bomb Oman, a longstanding U.S. security partner.
Elsewhere in the Middle East, Yemen’s Houthis launched missiles in an attack on vessels they described as a Saudi military ship and four escorts in the Red Sea, their military spokesperson, Yahya Saree, said on Telegram.
Later, the United Arab Emirates issued a brief alert on X saying its air defense systems detected a missile threat, before issuing a phone alert saying the situation was currently safe and normal activities could resume.
And in Russia, four sources told Reuters that the country is rerouting Kazakhstan’s crude oil exports from the Baltic port of Ust-Luga to the Black Sea port of Novorossiysk, freeing up capacity for more Russian oil exports from the Baltic amid heightened Black Sea security risks. The move would allow Russia to replace Kazakh barrels at Ust-Luga with its own crude exports, while Ukrainian drone attacks make it more difficult for Russian exporters to secure tankers for Black Sea loadings.