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(Bloomberg) — Oil held a two-day gain after US President Donald Trump extended a ceasefire with Iran, even as peace talks faltered and a blockade of the Strait of Hormuz kept flows locked up.
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Brent traded near $98 a barrel after adding almost 9% in the previous two sessions, while West Texas Intermediate was around $89. Trump said Tuesday that the US would hold off on fresh attacks on Iran but keep blocking ships linked to the Islamic Republic until “discussions are concluded, one way or the other.”
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The American president said in a post on Truth Social that if the US lifts its blockade to open the Strait of Hormuz, “there can never be a Deal with Iran, unless we blow up the rest of their Country, their leaders included!”
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Oil has been whipsawed by developments in the Persian Gulf and the near-halt of shipping through Hormuz, a vital artery that normally carries about one‑fifth of global crude flows. Volatility has soared to its highest since 2020, when the Covid-19 pandemic sapped demand.
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“Headlines are coming at 100 miles an hour, but the barrels are still stuck in neutral,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “The back-and-forth around a ceasefire extension, potential blockade, and Iran’s role is keeping markets on edge, but the reality is flows remain constrained.”
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Iran won’t reopen the strait as long as the US Navy continues to intercept ships and will, if necessary, break the blockade by force, the semi-official Tasnim news agency reported, citing sources. The US on Tuesday said it stopped and boarded a sanctioned oil tanker, after seizing a cargo ship over the weekend, and has turned around a total of 28 vessels.
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Brent, the global benchmark, briefly surged above $100 a barrel in post-settlement trading on Tuesday after the AP reported that US Vice President JD Vance scrapped a trip to Islamabad for peace talks. That came as Iranian media reported that the country informed the US via Pakistan that it won’t attend the talks. Futures then fell following Trump’s comments on an extension.
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The negotiations had been seen as an 11th-hour chance for de-escalation before the two-week truce ended, and to clarify whether oil tankers will soon be able to transit the strait. The two sides have a host of unresolved issues, including the Islamic Republic’s nuclear capabilities and Israel’s invasion of Lebanon.
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The Treasury Department “will continue to apply maximum pressure” to “degrade Tehran’s ability to generate, move, and repatriate funds,” Treasury Secretary Scott Bessent said in a post on X. “Kharg Island storage will be full and the fragile Iranian oil wells will be shut in,” he added, referring to the main site for the Islamic Republic’s crude exports.
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Iran exports most of its oil to smaller, independent refiners in China that are less exposed to international financial markets. Beijing has opposed the unilateral sanctions.
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Trump made cryptic comments Tuesday about China possibly providing weapons or other potentially lethal war supplies to Iran, a move that would test a US red line on aiding Tehran during the war, according to an interview on CNBC.
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“What matters for the oil market — and increasingly for the global economy — is the state of the Strait of Hormuz,” said Vandana Hari, founder of analysis firm Vanda Insights. “With no conceivable way to reopen it without a peace deal, we are stuck in a high oil price and inflationary environment.”
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—With assistance from Mia Gindis.
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English (US)