Oil prices rose Tuesday after Iran said the Strait of Hormuz will stay shut until the U.S. meets its conditions, extending a rally that has lifted crude more than 6% this week. Washington and Tehran sent conflicting signals on a possible deal even as ship traffic through the strait stayed near a standstill.
U.S. West Texas Intermediate futures gained 1.3% to close at $83.20 a barrel on Tuesday, while Brent crude advanced 1.36% to settle at $88.91 a barrel. The two benchmarks have gained more than 6% this week as hopes fade for a deal that would restore shipping through Hormuz. The moves extend Monday's 5% surge in crude oil markets on the same fading deal hopes.
Iran ties Hormuz to frozen funds
Mohsen Rezaei, secretary of Iran's Supreme National Security Council, demanded the U.S. unfreeze Iranian funds held overseas as a condition for reopening Hormuz, according to Reuters. Mohammad Mokhber, an advisor to Iran's Supreme Leader Mojtaba Khamenei, said on social media that "the Strait of Hormuz will not be opened until Iran's conditions are met."
Still, other signals pointed toward a thaw. Pakistan's Defense Minister Khawaja Asif told Bloomberg News that a peace arrangement appeared to be moving back into reach, continuing Islamabad's role mediating the interim U.S.-Iran deal that collapsed in June. President Trump, meanwhile, escalated his rhetoric this week by demanding Iran pay reparations to the U.S.
Traffic through Hormuz stays near a standstill
Ship transits through Hormuz slowed to just eight vessels crossing Monday, according to trade intelligence firm Kpler, down from more than 130 crossings before the U.S. and Israel attacked on Feb. 28. Energy Secretary Chris Wright said U.S. military escorts have lifted oil exports through the strait to a seven-day moving average of 9 million barrels a day, with total Gulf flows near 15 million barrels a day once pipeline exports are counted.
Trump also extended the suspension of a shipping law restricting the transport of goods between American ports to U.S. vessels, narrowing the waiver to vessels hauling energy resources. The U.S. Strategic Petroleum Reserve has fallen below 300 million barrels, its lowest level in more than four decades.
EIA raises its price and disruption forecasts
The U.S. Energy Information Administration said Tuesday it now expects supply disruptions from the Iran war of about 600,000 barrels a day through the end of next year, citing severe constraints on Hormuz transits it assumes will persist through August. It raised its Q3 2026 Brent forecast to $85 a barrel from $74 a barrel, and estimated that crude and petroleum liquids flows through the strait averaged 4.9 million barrels a day in Q2 2026, down from 21.6 million barrels a day in Q4 2025 before the conflict began.
Sources: CNBC, Investing.com
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