Oil Rises with Washington and Tehran Truce Stumbling and Continued Closure of Hormuz

SadaNews - Oil prices rose after U.S. President Donald Trump cast doubts on the ceasefire with Iran, following his rejection of Iran's latest peace offer, which extends the actual closure of the vital Strait of Hormuz.

Brent crude traded near $105 per barrel after rising 2.9% in the previous session, while West Texas Intermediate crude approached $99.

Trump told reporters in the Oval Office that the ceasefire depends on "resuscitation devices to keep it alive," while mocking Iran's response to his proposal to end the ongoing war for 10 weeks.

The ceasefire has been in effect since early April and has persisted even after a series of renewed violence recently, including attacks on ships.

Hormuz Closure Pressures Global Energy Markets

The near-total closure of the Strait of Hormuz has caused major disruptions in crude oil, natural gas, and fuel flows to global customers, raising concerns about a potential inflation crisis.

Iran responded to Trump's peace proposal by demanding that the United States lift the naval blockade and provide relief from sanctions while maintaining some level of control over traffic through the Strait of Hormuz, according to a person familiar with the matter who requested anonymity due to the sensitivity of the information.

Analysts at Bloomberg Economics, including Dina Esfandiary and Becca Wasser, wrote in a memo that "a comprehensive peace agreement is unlikely." They added, "We believe that the U.S. and Iran will likely return to exchanging strikes. However, we expect that intense gunfire will be temporary and will retreat to lower levels of fighting, in what we describe as the new normal in this protracted conflict."

Washington Considers Escalation and Imposes Iran-Related Sanctions

The U.S. president is meeting with his national security team to discuss the war, including the potential resumption of military action, Axios reported, citing three U.S. officials. Trump also told Fox News that he is considering reviving a plan to escort ships through the strait.

In the United States, fuel prices at filling stations have risen, increasing political pressure on Trump and the Republican Party ahead of the midterm elections in November. The country released a new wave of emergency oil reserves in an attempt to curb rising prices.

The war is likely to feature in Trump's meeting with Chinese President Xi Jinping this week, as U.S. officials stated that the American president would press Beijing on its approach to Iran.

On Monday, the U.S. Treasury imposed new sanctions on entities that helped sell Iranian oil to China, the largest buyer of Iranian crude.

Market Momentum Declines Despite Ongoing War

In related news, Amin Nasser, CEO of Saudi Aramco, stated that global markets are losing 100 million barrels of supply weekly as long as Hormuz remains closed. The company has redirected some of its exports through its western port, but prices remain high while importers, including China, are buying less.

Despite the lack of any indications of an imminent solution to the war, market strength indicators have declined in recent sessions as refineries reduced their purchases. The prompt spread for Brent crude was about $4 per barrel in the backwardation case on Tuesday, compared to a peak of nearly $10 at the beginning of last month.