Global oil prices remained elevated on Tuesday, hovering near multi-year highs as tensions between the US and Iran escalated ahead of a critical diplomatic deadline set by President Donald Trump. While price movements were muted, the broader market sentiment remained firmly anchored in geopolitical uncertainty. Brent crude traded close to $110 per barrel after a modest gain in the previous session, while US benchmark West Texas Intermediate (WTI) held above $112 — its highest level since mid-2022.
Despite signalling that negotiations with Iran were progressing, Trump simultaneously sharpened his rhetoric, warning of severe military consequences if Tehran fails to comply before the Tuesday evening deadline. Among the priorities outlined was ensuring the reopening of the Strait of Hormuz — a crucial artery for global oil shipments.
The US president also hinted at potential strikes on critical Iranian infrastructure, including bridges and power facilities — a move that could significantly escalate the conflict and raise legal and humanitarian concerns globally.
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Iran, in response, has warned it could target energy infrastructure across the Persian Gulf, raising the risk of a broader regional disruption with far-reaching implications for global energy markets.
The ongoing conflict, now stretching into its sixth week, has already rattled crude markets. Traders are increasingly pricing in the risk of tighter supplies, particularly as buyers scramble to secure US crude shipments.
The prompt spread for WTI — a key gauge of near-term supply tightness — surged close to record levels, signalling strong demand for immediate deliveries. Analysts caution that while markets appear to be bracing for a resolution, the outcome may not necessarily ease volatility. Any escalation into direct military action could deepen the supply shock and intensify pressure on the global economy.
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