Oil edged to three-week high as dimming US-Iran peace hopes counter supply workarounds

Global crude benchmarks edged higher on Tuesday to settle at their highest levels in more than three weeks, buoyed by the collapse of US-Iran ceasefire negotiations, escalating Middle Eastern military strikes, and Russian export rerouting, though stronger gains were capped by alternative maritime crude flows.

International Brent crude futures settled up 15 cents, or 0.17%, at $91.02 a barrel, whilst US West Texas Intermediate (WTI) crude gained 44 cents, or 0.52%, to finish at $84.94 a barrel—marking the highest settlement for both contracts since 24 July.

Upward momentum was underpinned by deteriorating diplomatic prospects after Washington ruled out extending the interim ceasefire, while Tehran adopted a "fully offensive" military posture and reaffirmed that the Strait of Hormuz would remain closed until earlier agreement conditions are met.

Bullish pressure was reinforced by a string of regional maritime hostilities, including a projectile strike on a commercial vessel exiting the Strait of Hormuz reported by the UK Maritime Trade Operations (UKMTO), Houthi missile barrages targeting Saudi-linked vessels in the Red Sea, and UAE reports of incoming ballistic missiles. Secondary supply tightness was supported across Northern Europe as Russia began shifting Kazakh crude to the Black Sea port of Novorossiysk to prioritise its own Baltic loadings out of Ust-Luga.

However, stronger price upside was restrained by market fatigue over recurring geopolitical headlines alongside higher-than-expected volumes of covert crude slipping through the Strait of Hormuz. Downside pressure was further cushioned as Saudi Aramco resumed loadings via ship-to-ship transfers off Fujairah, and major Chinese shipping lines continued lifting crude outside the Gulf.

Written by: Aiman Haikal