Brent crude hits six-session winning streak as Hormuz talks stall

Brent crude rose for a sixth consecutive session on Tuesday, reaching around $89 a barrel, as fading hopes for a quick reopening of the Strait of Hormuz kept energy markets on edge and stoked inflation fears ahead of a pivotal U.S. consumer price report.

Hardening Positions

The rally in oil prices intensified after Washington and Tehran appeared to harden their positions over the strategic waterway, through which roughly a fifth of the world's oil supply passes. Pakistan's defense minister said the two sides were "close to some sort of arrangement," but the lack of concrete progress kept traders wary.investing+1

Qatar's foreign ministry spokesperson said negotiations between Oman and Iran had entered an "advanced stage," though added that talks were at a "critical juncture." WTI crude settled around $83.20 a barrel, extending its week-long climb.longbridge+1

"We see crude oil prices driving the war narrative, with price swings likely to dictate the pace of escalation and de-escalation," said Elias Haddad at Brown Brothers Harriman.economictimes

Wall Street Retreats

The persistent oil rally weighed on U.S. equities on Tuesday. The S&P 500 fell 0.3% to 7,733.53, the Dow Jones Industrial Average lost about 180 points, and the Nasdaq Composite slipped 0.6%. Trading volume was among the lowest of the year, with investors staying sidelined before Wednesday's inflation data.ts2+1

Gasoline prices averaging around $4.01 a gallon added to concerns that energy-driven cost pressures could complicate the Federal Reserve's rate-path calculus.ts2

CPI in Focus

Attention now turns to the July CPI report, due Wednesday morning. Economists expect headline inflation of 0.1% month-on-month and 3.4% year-on-year, with core CPI forecast at 0.2% monthly and 2.5% annually. The data arrives after three Fed officials dissented in July in favor of a rate hike, and following a weak payrolls report that showed a decline of 23,000 jobs versus expectations of 85,000.investing+1

"I expect the CPI report to continue its downward trend which will further support the case for the Federal Reserve to hold rates steady rather than hiking them," said Dennis Follmer at Montis Financial.economictimes

A softer reading could ease pressure on the Fed, but the Hormuz standoff threatens to push energy costs higher still — leaving investors caught between geopolitical risk and monetary policy uncertainty.