Oil rises as US-Iran peace hopes fade

Oil prices surged to their highest level in over three weeks on Tuesday, as Iran signaled a more aggressive stance and the Strait of Hormuz remained closed, while the United States dismissed extending a ceasefire. Brent crude futures rose 15 cents, or 0.17%, to $91.02 a barrel, while U.S. West Texas Intermediate crude futures increased 44 cents, or 0.52%, to $84.94 a barrel.

Both contracts closed at their highest since July 24. Market analyst Darrell Fletcher noted that while the market's reaction to the headlines has been muted, covert shipments through the Strait of Hormuz have exceeded expectations, adding to upward pressure on prices. Saudi Aramco has resumed oil loadings from within the strait, offering cargoes for shipment via ship-to-ship transfers off Fujairah in the UAE, and two Chinese shipping companies have begun collecting oil cargoes outside the Gulf.

However, vessel traffic remains minimal, with only a handful of vessels passing through the strategic waterway. Iran has vowed to maintain the strait's closure until the United States fulfills the interim deal conditions, according to top Iranian negotiator Mohammad Baqer Qalibaf. U.S. President Donald Trump, who previously dismissed the deal as over, stated that no talks between the two countries are ongoing, but the strait is still open.

Iran's military posture has been described as fully offensive as peace efforts have stalled, and the country is reportedly negotiating with Oman on managing the strait, though tensions with the United Kingdom and the United Arab Emirates persist due to missile attacks and other incidents.