Oil prices rise, Asian stocks drift amid US-Iran stalemate

Oil prices surged on Tuesday following negotiations between the US and Iran over a peace deal and the reopening of the Strait of Hormuz, which stalled. Asian shares, meanwhile, remained uncertain regarding the global inflation outlook, causing their prices to drift. US President Donald Trump responded to Iran's conditions for a peace deal by demanding compensation for people killed in wars, attacks, and protests, escalating tensions further.

Brent crude futures soared to $88.00 per barrel, while US crude futures rose to $82.45, both reaching their highest levels since July 31. Analysts described the situation as a "Mexican standoff" or a "war of attrition," as both sides wait for the other to yield. The oil price increase adds pressure to the US July consumer price report, expected to show a 0.1% monthly rise in the headline reading and 0.2% in the core measure.

If the report shows a stronger-than-expected inflation, it could lead to a Federal Reserve rate hike next month, potentially reigniting concerns about stagflation. The US economy is currently hotter than the "Goldilocks" scenario, signaling the need for higher interest rates. Meanwhile, the Reserve Bank of Australia is scheduled to announce its policy decision later in the day, with expectations of keeping rates unchanged.

In currencies, the yen weakened against the dollar to 159 per dollar, following suspected intervention by Japan and the US. However, the dollar's marginal gain from the oil price rise kept the euro from a monthly high.