Oil prices continued their rally on Tuesday, extending gains from the previous session as market sentiment remained cautious due to stalled peace efforts between US–Iran. The Middle East conflict, which has now touched the two month mark has disrupted the crucial Strait of Hormuz, limiting oil flows across the globe. WTI Crude was trading at $97.31, up 0.94 or 0.98%, while Brent Crude stood at $109.3, higher by 1.05 or 0.97%, as of the latest update. The rally had already gained momentum on Monday, when crude prices surged around 3% to hit a two-week high. Brent futures settled at $108.23 a barrel, rising $2.90 or 2.8%, while US West Texas Intermediate closed at $96.37, up $1.97 or 2.1%. The rise came as peace talks between the US and Iran lost traction and shipping activity through the Strait of Hormuz remained under pressure, tightening global energy supplies. Sentiment in energy markets was further influenced by developments in diplomatic efforts. Over the weekend, expectations of progress weakened after US President Donald Trump called off a planned Islamabad visit by his envoys Steve Witkoff and Jared Kushner. This came at a time when Iranian foreign minister Abbas Araqchi had already reached Pakistan, adding to uncertainty around negotiations. Tensions surrounding the broader US–Iran dialogue have continued to guide investor sentiments, with attention also on geopolitical risks involving Israel and Lebanon. At the same time, global markets were awaiting policy signals from major central banks, including the US Federal Reserve, the European Central Bank and the Bank of Japan. The situation around the Strait of Hormuz remains a key driver of oil market volatility. Following the breakdown in diplomatic momentum, Iran has maintained restrictions on shipping through the strategic waterway, while the United States continues its blockade of Iranian ports. The Strait, which typically handles cargo equivalent to about 20% of global oil and gas consumption, has seen disrupted movement, tightening supply chains further. Iran has continued to insist that vessels must obtain its approval before passing through the Strait, while Trump has stated that the United States has “total control” over the route. The US Navy has also sustained its blockade of Iranian ports and vessels.
