Oil climbs as fading US-Iran peace hopes raise supply risks

Oil prices climbed to three-week highs on Tuesday amid dwindling hopes for a US-Iran peace agreement, with Iran signaling a more aggressive stance and the Strait of Hormuz remaining shut. However, gains were restrained, with Brent crude futures up 15 cents, or 0.17%, to $91.02 a barrel, and U.S. West Texas Intermediate crude futures rising 44 cents, or 0.52%, to $84.94 a barrel.

Market movements have been dampened by the ongoing turbulence since June, with no concrete outcomes, according to Darrell Fletcher, managing director of Commodities at Bannockburn Capital Markets. Iranian vessels have resumed loading oil through the strait, offering cargoes for ship-to-ship transfers off Fujairah in the UAE, while Chinese shipping firms have started collecting oil cargoes outside the Gulf.

Despite these developments, vessel traffic through the strategic waterway remains minimal. Iran's top negotiator, Mohammad Baqer Qalibaf, stated that the Strait of Hormuz would remain closed until the United States fulfills the conditions of the interim deal signed in June. Meanwhile, the United States dismissed the possibility of extending the ceasefire, and Trump's comments on the ongoing talks received a muted market response.