Oil steadies near one-week highs as US-Iran peace deal hopes dim

Oil prices remained steady near their one-week highs on Tuesday, as fading hopes of a U.S.-Iran peace deal to end their conflict and reopen the Strait of Hormuz persisted. The U.S. and Iran have been at odds since Iran fired rockets at bases housing U.S. forces in Iraq in January. President Donald Trump demanded compensation from Iran for the damage caused in the U.S., which is expected to complicate any agreement.

Brent crude futures hovered at $87.81 a barrel, while U.S. West Texas Intermediate crude stayed at $82.20 a barrel. Both prices surged over 5% on Monday, reaching their highest levels since July 31. Analysts noted that the gap between the U.S. and Iran's demands for any deal is significant, causing some optimism to dissipate and oil prices to decline.

Saudi Aramco has also delayed the restart of its Jazan refinery, which can produce 400,000 barrels per day, until August 30 due to recent Houthi attacks. Experts warn that the threat of further attacks and the control of the Strait of Hormuz by the U.S. keep shipping costs high, limiting oil flows and keeping energy prices elevated.