By: Economy Middle east

Oil prices witnessed an increase of nearly 1 percent on Tuesday as negotiations intended to resolve the conflict involving the United States, Israel, and Iran appeared increasingly fragile. The response from Tehran regarding a proposal from Washington underscored significant differences, which have sustained ongoing concerns regarding global supply.

Brent crude futures rose by 75 cents, or 0.72 percent, reaching $104.96 per barrel. Simultaneously, U.S. West Texas Intermediate saw a gain of 87 cents, or 0.89 percent, climbing to $98.94 by 8:30 UAE time. These movements followed a session on Monday where both benchmarks had already increased by nearly 2.8 percent.

U.S. President Donald Trump remarked on Monday that the ceasefire with Iran was “on life support,” highlighting fundamental disagreements over several key demands. These points of contention include the total cessation of hostilities across all fronts, the lifting of a U.S. naval blockade, the legal resumption of Iranian oil sales, and financial compensation for damages resulting from the war. Furthermore, Tehran emphasized its sovereign control over the Strait of Hormuz. This maritime passage is of critical importance to the global economy, as approximately one-fifth of the world’s total oil and liquefied natural gas flows through this specific waterway.

Supply disruption concerns

The threat of disruptions related to the near-closure of the strait has already forced producers to reduce their exports. A Reuters survey conducted on Monday indicated that OPEC oil production in April dropped to its lowest point in more than twenty years. Saudi Aramco CEO Amin Nasser issued a warning on Monday, stating that interruptions to oil exports through the strait could potentially postpone a return to overall market stability until 2027. He noted that such a scenario could result in the loss of approximately 100 million barrels of oil per week.

In other developments on the supply front, analysts participating in a Reuters poll forecasted a decline in U.S. crude inventories. These stocks were projected to be down by approximately 1.7 million barrels for the previous week. The combination of geopolitical instability in the Middle East and tightening domestic reserves continues to exert upward pressure on energy valuations. Market participants remain focused on the outcome of diplomatic efforts, as the potential for further supply constraints remains a primary driver of current pricing trends in the international arena.