Oil prices climbed for a third session in a row on Tuesday as prospects for an agreement to end the Middle East war faded, with Iran saying it would adopt a more offensive stance and the U.S. ruling out extending a cease-fire deal, further heightening worries about global energy supply.
Iran will shift to a "fully offensive" military posture as efforts have stalled towards a permanent end to the war, a senior Iranian official told Reuters on Monday, as Washington ruled out extending its temporary cease-fire pact.
Brent crude futures climbed 89 cents, or 1%, to $91.76 a barrel by 6:41 a.m. GMT, extending their gains on Monday and were at their highest since July 30.
U.S. West Texas Intermediate (WTI) crude futures were up $1.05 at $85.55 a barrel, also extending gains from the previous session to their highest since July 31.
Outward progress on peace talks and resumption of oil tanker traffic through the strategic Strait of Hormuz has halted, threatening to extend the conflict the United States and Israel launched with attacks on Iran on Feb. 28.
"Oil has jumped to start the week as U.S.-Iran relations look increasingly shaky," said Tim Waterer, chief market analyst at KCM.
"A deal to reopen the Strait of Hormuz still does not appear to be in sight, and shipping numbers remain at a trickle."
A projectile struck a vessel transiting out of the Strait of Hormuz on Tuesday in the latest of the attacks that have kept crossings to the single digits, despite a slight rise from the weekend, tracking data showed.
Yemen's Houthis launched missiles in an attack on vessels they described as a Saudi military ship and four escorts in the Red Sea, their military spokesperson, Yahya Saree, said on the Telegram messaging app.
"The lack of any kind of deal will have an impact on oil price expectations further out in 4Q and even in 2027," said DBS Bank's head of energy research, Suvro Sarkar.
While the deal-related uncertainty lasts, he said he expected oil prices to range between $80 and $100 a barrel in the near term.
Iran has separately been negotiating with Oman an agreement on managing the Strait of Hormuz and says they are close to a deal.
But U.S. President Donald Trump responded to those talks with a threat to bomb the Gulf state, a longstanding U.S. security partner.
U.S. crude oil stockpiles were expected to have fallen last week alongside product inventories, a preliminary Reuters poll showed on Monday.
