Brent crude tops $90 as US-Iran deal hopes fade

Brent crude oil breached $90 a barrel on Tuesday, extending a four-day rally as diplomatic positions between Washington and Tehran hardened, dimming prospects for a near-term agreement to reopen the Strait of Hormuz. West Texas Intermediate also climbed, rising above $84 a barrel.thenationalnews+2

The surge followed a session on Monday in which both benchmarks jumped more than 5% to their highest levels since July 31. The catalyst was President Donald Trump's demand that Iran compensate the United States for people killed in conflicts linked to Tehran, a condition he said would be included "firmly" in any future negotiations. The remarks came hours after Iran's Supreme National Security Council reiterated that the strait would not reopen until the US "corrects its behaviour," listing six conditions including the lifting of sanctions and the withdrawal of American naval forces from the region.ndtvprofit+2

A Widening Diplomatic Gap

"There appears to be a gulf, no pun intended, between the US and Iran over what any agreement would actually look like," said Tim Waterer, chief market analyst at KCM Trade. "As a result, some of the optimism that built up last week is being unwound." Tony Sycamore, a market analyst at IG, described the standoff as "a bit of a Mexican standoff" and forecast oil trading in a $75–$95 range "while we wait to see who blinks first."business-standard+1

Physical flows through Hormuz — a chokepoint for roughly one-fifth of global crude and liquefied natural gas shipments — remain severely constrained. Barclays ↗ 0.18% data showed net exports of crude and refined products through the strait averaged just 3 million barrels per day in the week ending August 7, down from 4.4 million bpd the previous week. Soojin Kim, a research analyst at MUFG, said traffic through the waterway was running at around five vessels per day.geo+2

Broader Supply Risks Mount

Supply concerns extend well beyond Hormuz. Saudi Aramco has postponed the restart of its 400,000-barrel-per-day Jazan refinery until August 30 following two attacks on the facility claimed by Yemen's Houthi militants. European diesel futures jumped 9% on Monday as the wider conflict disrupted refinery operations and fuel supplies.hdfcsky+2

Meanwhile, U.S. Strategic Petroleum Reserve inventories fell by 6.1 million barrels last week to 298.7 million barrels — their lowest level since 1983 — as part of a coordinated international release aimed at addressing supply disruptions.dmarketforces

Inflation Implications

The oil rally raises the stakes for Wednesday's U.S. consumer price report, where expectations point to a modest monthly gain. "We think the risks are skewed towards a hot print, which would probably drive a rebound in rate expectations and, potentially, renewed worries about stagflation," said Jonas Goltermann, chief markets economist at Capital Economics. Goldman Sachs The Goldman Sachs Group, Inc. ↘ 0.49% has warned that Brent could reach $120 a barrel if Hormuz disruptions persist, while JPMorgan ↗ 0.63% estimates each additional month of disruption could add $7 to $8 per barrel.economictimes+1