(Bloomberg) — Oil prices edged higher Tuesday as traders remained skeptical that diplomatic progress between the U.S. and Iran would quickly restore shipping through the Strait of Hormuz, while additional supply risks in the Middle East and Russia kept markets on edge.
West Texas Intermediate rose 1.3% to settle near $83/bbl, marking a fourth consecutive session of gains. Crude prices have remained highly sensitive to developments surrounding negotiations to reopen the critical energy chokepoint, particularly after U.S. President Donald Trump issued new demands on Tehran.
Pakistan’s defense minister said Tuesday that the U.S. and Iran are “close to some sort of arrangement” on Hormuz. Talks between Oman and Iran have also reached an advanced stage, Al Jazeera reported, citing a Qatari foreign ministry spokesperson.
Restoring shipping through Hormuz remains critical to rebalancing global oil markets. Before the war, the waterway handled about one-fifth of global oil and gas flows. The U.S. Energy Information Administration now expects oil supply disruptions of roughly 600,000 bpd through the end of 2027, according to its latest Short-Term Energy Outlook.
“The market saw some profit taking as Pakistan came out with more optimistic rhetoric that may imply that at least some communication is taking place between Iran and the U.S.,” said Arne Lohmann Rasmussen, chief analyst at Global Risk Management.
Continued security incidents across the region added to uncertainty. U.S. Central Command said a Navy helicopter fired two missiles at a Panama-flagged cargo vessel attempting to transit the Gulf of Oman. Meanwhile, Iran-backed Houthi militants continue to threaten shipping in the Red Sea, an increasingly important alternative export route for Saudi Arabia since Persian Gulf flows were disrupted.
Supply risks also extended beyond the Middle East. A fire was reported Tuesday at Rosneft’s Komsomolsk refinery in Russia’s Khabarovsk region, although operations were not halted. Drone debris also caused a fire at an industrial facility in Russia’s Orenburg region.
Crude markets have experienced sharp swings since the Iran war began in late February, with traders continuing to weigh the prospects of restored Hormuz shipping against persistent geopolitical risks to global oil supplies.
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