Oil rises as Iran signals offensive stance, US rules out ceasefire extension

Oil prices climbed on Tuesday as hopes for ending the West Asia conflict appeared to fade. Iran declared it would adopt a more aggressive military stance, while the United States refused to extend a temporary ceasefire agreement, fueling concerns over potential supply disruptions. Iran's senior official informed Reuters that the shift to a "fully offensive" military posture was due to stalled negotiations for a permanent peace deal with the US.

Simultaneously, Washington ruled out extending the ceasefire arrangement. Progress in peace talks and the resumption of oil tanker traffic through the strategically vital Strait of Hormuz has stalled, threatening to prolong the conflict initiated by US and Israeli attacks on Iran on February 28. Brent crude futures surged 27 cents, or 0.3%, to $91.14 by 00:03 GMT, having risen to their highest level since July 30 on Monday.

US West Texas Intermediate crude futures increased 42 cents to $85.04 a barrel, following a more than 1% gain earlier in the session to $85.37, their highest since July 31. Market analyst Tim Waterer commented that "Oil has jumped to start the week as US-Iran relations look increasingly shaky. A deal to reopen the Strait of Hormuz still does not appear to be in sight, and shipping numbers remain at a trickle."

Following attacks on tankers, only five cargo vessels passed through the Hormuz strait on Saturday, with none reported for Sunday, according to ship-tracking data from Kpler, compared to 31 vessels in the previous weekend. Yemen's Houthi rebels claimed responsibility for attacking what they described as a Saudi military ship and four escort vessels in the Red Sea with missiles, according to the group's military spokesperson Yahya Saree on Telegram.

"The dual chokehold on the Strait of Hormuz and the Bab el-Mandeb remains highly significant," Waterer stated, emphasizing that these issues are central to the current supply-risk narrative. Iran has been negotiating an agreement to manage the strait with Oman, reportedly nearing a deal. However, US President Donald Trump threatened to bomb the Gulf state, a long-standing US security partner, in response to those discussions.

Meanwhile, media reports suggested Trump had opened back-channel talks with the Islamic Revolutionary Guard Corps. It was noted that US crude oil stocks were expected to have declined last week, alongside product inventories, according to a preliminary Reuters poll on Monday.