Oil markets extended gains on Tuesday as a diplomatic deadlock between the United States and Iran kept a critical shipping lane effectively out of service. The Strait of Hormuz - a conduit that normally carries the equivalent of about 20% of global oil and gas consumption - remains mainly shut, limiting access to supplies from the Middle East for international buyers.
According to U.S. officials, President Donald Trump expressed displeasure with an Iranian proposal intended to halt hostilities. Iranian sources said the proposal did not address its nuclear programme until fighting ceased and disputes over Gulf shipping were settled. That reaction left the conflict in a stalemate, with Iran having shut shipping flows through the Strait of Hormuz and the U.S. maintaining a blockade of Iranian ports.
Brent crude futures for June rose 45 cents, or 0.4%, to $108.68 a barrel as of 0051 GMT, after a 2.8% advance in the previous session that produced the contract's highest close since April 7. The Brent contract marked its seventh straight day of gains. U.S. West Texas Intermediate (WTI) crude for June increased 58 cents, or 0.6%, to $96.96, following a 2.1% rise in the prior session.
Earlier talks between the U.S. and Iran collapsed last week after in-person negotiations failed to produce an agreement. The impasse has shifted traders' attention away from rhetoric and toward the reality of physical shipments, a dynamic that is now dictating market sentiment.
"For oil traders, it9s not the rhetoric that matters any more, but the actual physical flow of crude oil through the Strait of Hormuz, and right now, that flow remains constrained," said Fawad Razaqzada, market analyst at City Index and FOREX.com.
Razaqzada added that, even if a diplomatic settlement were reached, recovery in production and logistics could take months due to outages and transport challenges.
Ship-tracking data highlighted the disruption: six Iranian oil tankers were forced to turn back because of the U.S. blockade. At the same time, the same tracking showed one liquefied natural gas tanker operated by the United Arab Emirates' Abu Dhabi National Oil Co did transit the Strait of Hormuz and appeared to be near India.
Navigation volume figures underline how far operations have changed: prior to the U.S.-Israeli war on Iran, which began on February 28, between 125 and 140 vessels used to transit the strait each day. That level of traffic has not been restored amid current hostilities and maritime restrictions.
This episode underscores the market9s sensitivity to physical supply disruptions and the importance of maritime access for energy security. Prices will likely remain responsive to developments that affect the Strait of Hormuz and the status of diplomatic negotiations.