Oil prices climbed for a third consecutive session on Tuesday as hopes for a lasting U.S.-Iran peace agreement weakened, reviving fears that disruptions around the strategically vital Strait of Hormuz could keep global energy supplies under pressure.
Brent crude futures rose 89 cents to $91.76 a barrel, reaching their highest level since July 30, while U.S. West Texas Intermediate (WTI) crude gained $1.05 to $85.55 a barrel, its highest level since July 31.
The latest rally came after Iran signaled that it could adopt a “fully offensive” military posture as diplomatic efforts to secure a permanent end to the conflict stalled. The United States, meanwhile, has ruled out extending the temporary ceasefire agreement, further clouding prospects for a breakthrough.
Strait of Hormuz remains the key pressure point
For oil traders, the biggest concern is not simply the collapse of diplomatic momentum — it is what happens to shipping through the Strait of Hormuz, one of the world’s most important energy chokepoints.
A projectile struck a vessel transiting out of the strait on Tuesday, adding to a series of attacks that have sharply reduced commercial crossings. Tracking data showed the number of vessels passing through remained in the single digits, despite a modest increase from the weekend.
The situation has also been complicated by attacks in the Red Sea. Yemen’s Houthis reported missile attacks against vessels they described as a Saudi military ship and four escorts, adding another layer of risk to regional shipping.
Oil markets face more volatility
The fading prospect of a diplomatic settlement has forced traders to reassess how long supply disruptions could last.
DBS Bank’s head of energy research, Suvro Sarkar, said the absence of a deal could affect oil-price expectations into the fourth quarter and even into 2027. He expects crude prices to remain within an $80-to-$100-a-barrel range in the near term while uncertainty persists.
That means the market is increasingly watching geopolitical developments alongside traditional oil fundamentals. Any meaningful progress toward reopening the Strait of Hormuz could ease the supply premium embedded in prices. But further military escalation or prolonged restrictions on tanker traffic could push prices higher.
What comes next?
The immediate question for energy markets is whether Washington and Tehran can revive diplomacy before the disruption to regional shipping becomes even more entrenched.
For now, the answer remains uncertain.
With Iran signaling a tougher military posture, the U.S. refusing to extend the ceasefire and tanker traffic through the Strait of Hormuz still severely constrained, traders are bracing for another period of sharp oil-price swings.
And if the diplomatic door closes completely, the next move in crude may depend less on negotiations — and more on what happens at the world’s most critical oil chokepoint.
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