The prices of the two major crude oil grades climbed about 1 per cent on Tuesday as the market waited for news on the Iran war, with the Iranian government reviewing a proposed agreement with the United States to halt the conflict.
Brent futures rose $1.02 or 1.1 per cent to $96.00 a barrel, while the US West Texas Intermediate (WTI) crude increased by $1.60 or 1.7 per cent to $93.76 per barrel.
Iran is examining the proposed deal with the US to halt their war but has not communicated with the American government for a few days, according to Iranian media.
This is even as US President Donald Trump said on Monday that negotiations had been going on, adding there would be a deal in the coming days to extend a ceasefire agreed to in April and reopen the strait.
Meanwhile, US Secretary of State Marco Rubio told lawmakers yesterday that Iran has agreed to negotiate aspects of its nuclear programme that it previously refused to discuss, but said that was not a guarantee that negotiations would lead to a deal.
More than three months after the US and Israel launched strikes against Iran, the conflict is stuck in a stalemate, with a shaky ceasefire in place while the pivotal Strait of Hormuz remains largely shut to maritime traffic.
Iran has effectively halted most non-Iranian shipping in and out of the Gulf since the war began, choking off about a fifth of global oil and liquefied natural gas flows and driving prices up by 50 per cent or more. The US has also maintained a blockade on Iranian ports.
The European Union (EU) signalled willingness to support a durable agreement through maritime operations, economic incentives and conditional sanctions relief. This is contingent on a temporary peace agreement between the US and Iran.
The International Energy Agency (IEA) warned that global oil markets could enter a “red zone” in July and August as rapidly depleting crude inventories coincide with the onset of peak summer fuel demand.
According to the energy watchdog, global oil inventories fell by over 250 million barrels between March and May, with on-land commercial and strategic stockpiles draining at a record pace.
The closure of the Strait of Hormuz has knocked out roughly 10 per cent of global oil supply, making this the largest oil supply shock in history. Net cumulative losses from Gulf producers exceed 1 billion barrels, with approximately 14 million barrels per day shut in. Global supply is projected to fall by around 3.9 million barrels per day across 2026, with the IEA projecting that the global oil deficit will average 1.78 million barrels per day for the full year.