(Bloomberg) — Oil rose a third day on pessimism over the prospects of the US and Iran reaching a peace deal and as fighting flared up in the Persian Gulf.
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West Texas Intermediate climbed toward $95 a barrel, after adding more than 7% in the prior two sessions, while Brent closed at $96 on Tuesday. Israel is continuing attacks on Lebanon, jeopardizing fragile, long-running negotiations between Washington and Tehran.
Another round of talks between Israel and Lebanon are scheduled for Wednesday. President Donald Trump said he’s still optimistic the US can reach an interim peace deal with Tehran soon — disputing reports in Iranian state media that discussions with Washington had been suspended over the fighting in Lebanon.
The lack of clarity over the potential extension of the current ceasefire — and the future of flows through the Strait of Hormuz — has buffeted oil prices, which fell last month on optimism that a deal could be reached. The delay in a resolution is raising concerns that the world will need to tap crude inventories further as it waits for Persian Gulf exports to fully resume.
“With Middle East production likely not returning to pre-war levels until October-November at the earliest,” global inventories will fall by 800 million barrels, TD Securities commodity analysts including Bart Melek said in a note. “As such, we see Brent crude averaging $104 a barrel in the second half of the year, with a risk of prices spiking above $150 due to regional scarcities.”
Meanwhile, fighting has escalated in the Middle East. Iran fired ballistic missiles at Kuwait and Bahrain — which broke apart en route or were intercepted — while US forces conducted strikes on the Islamic Republic’s Qeshm Island, US Central Command said in a post on X.
Trump wants Iran to put specific nuclear concessions in writing as part of a preliminary agreement to end the war, ABC News reported, citing people familiar with the matter. Tehran had earlier given verbal assurances that it would agree to certain terms related to their nuclear program, according to the report.
Price volatility has forced dealers to scale back their risk exposure, pushing open interest — the total number of futures contracts that haven’t been closed, liquidated or delivered — in global benchmark Brent to the lowest since August.