Oil surges above $91 as Iran-US tensions raise supply fears

Oil prices climbed on Tuesday as hopes for a durable end to the Iran-US conflict weakened, according to Mettis Global. Brent crude futures gained 3.58 per cent to $91.44 a barrel, while West Texas Intermediate rose $2.63, or 3.22 per cent, to $84.36. Iran is preparing a more aggressive military stance after talks with Washington stalled, a senior Iranian official said. Washington has also ruled out extending the temporary truce, further reducing the chances of a settlement.

Work on a lasting settlement has slowed, and tanker movements through the Strait of Hormuz have fallen sharply following recent attacks. Kpler figures recorded five commodity ships passing through the Strait on Saturday and none on Sunday, versus 31 over the previous weekend. Separately, the Houthi group in Yemen said it launched missile strikes on a Saudi naval ship and four accompanying vessels in the Red Sea. Traders are closely watching the disruption in the Strait and the Bab el-Mandeb for its effect on crude flows.

Iran is also in talks with Oman on traffic through the Strait, although US President Donald Trump has warned of military force against Oman over the talks. Reports also said Trump opened back-channel contacts with the Islamic Revolutionary Guard Corps, which could open a route to renewed diplomacy. A preliminary Reuters poll expects US crude and fuel stocks to have fallen last week, another factor lending support to prices.