Oil Maintains Gains Near $114 as Tensions Rise in Hormuz

SadaNews - Oil prices have retained most of their strong gains following an escalation of tensions in the Middle East, after a gunfire exchange between the United States and Iran, attacks on ships near the Strait of Hormuz, and the return of Iranian attacks on energy infrastructure.

Brent crude traded near $114 per barrel, following a jump of about 6% on Monday, while West Texas Intermediate crude was below $105.

The U.S. Central Command stated that the U.S. military repelled Iranian attacks while escorting two vessels flying the American flag through the passage. In the UAE, an oil facility in Fujairah was attacked.

Threatened Ceasefire and U.S. Efforts to Open the Corridor

These developments come at a time when the United States is attempting to open a corridor in Hormuz for stranded ships, raising doubts about the durability of the ceasefire that has been in place for four weeks between Washington and Tehran.

U.S. President Donald Trump stated that the war could continue for an additional two to three weeks, according to an interview with "Salem News Channel".

"Bloomberg" quoted Sol Kafounik, Chief Energy Analyst at "MST Market" as saying, "These attacks indicate an erosion of the ceasefire." He added: "Oil prices could surge significantly if fighting resumes, especially if more oil infrastructure is damaged."

Constrained Supplies and Ongoing Upward Pressure

Brent crude has risen about 90% since the beginning of the year, as the conflict has deprived the market of millions of barrels, amid an ongoing effective closure of the strait and production disruptions in the region.

The waterway is subject to a dual blockade, with Tehran seeking to prevent ships from passing through, while Washington prohibits ships traveling to and from Iran.

Iranian Foreign Minister Abbas Araqchi stated that talks with Washington are "making progress", but he confirmed that the events in Hormuz underscore that "there is no military solution to a political crisis".

Gregory Brew, a geopolitical analyst at "Eurasia Group", noted that "as long as there is no agreement between the United States and Iran, it is likely that the strait will remain closed," which means continued upward pressure on prices, according to "Bloomberg".

Energy Prices Heighten Inflationary Concerns

U.S. Defense Secretary Pete Hegseth is scheduled to hold a press conference at the Pentagon later on Tuesday, alongside Chairman of the Joint Chiefs of Staff General Dan Kind.

The surge in energy costs has raised concerns that the conflict could fuel inflation and weaken growth.

In the U.S. Treasury market, yields on 30-year bondsrose to their highest levels since July, surpassing 5%, as traders increased bets that the Federal Reserve may be forced to change its course and raise interest rates to curb prices.

"Bloomberg" quoted Carl Larry, oil and gas analyst at "EnViron", as saying, "Escalation seems to be the likely course, which means oil is set to rise further." He added: "Peace is fading, and what may occur during the escalation is unclear, but it won't be good."