Brent Tops $91 as Iran Tensions Revive Hormuz Supply Fears

Key Takeaways

• Brent crude rose to $91.14 a barrel, while WTI reached $85.04 after briefly trading as high as $85.37.
• Iran threatened a more aggressive military posture as a 60-day US-Iran negotiation period ended without a permanent agreement.
• Tanker traffic through the Strait of Hormuz remains severely restricted, maintaining a substantial geopolitical risk premium in oil prices.

Brent and WTI Reach Their Highest Levels Since Late July

Brent crude futures gained 27 cents, or 0.3%, to trade at $91.14 a barrel in early Tuesday trading. The international benchmark had already risen by more than $2 on Monday, settling 2.7% higher at $90.87 and reaching its strongest level since July 30.

US WTI crude futures advanced 42 cents to $85.04 a barrel. Prices briefly touched $85.37, their highest level since July 31, after gaining more than 1% earlier in the session.

Although Tuesday’s percentage gains were relatively modest, they extended a sharp repricing of geopolitical risk that began at the start of the week. The oil market is increasingly reflecting the possibility that restrictions on Gulf energy exports could last longer than previously expected.

The rally also shows how sensitive crude prices remain to developments involving Iran. Any sign of diplomatic progress has recently pushed prices lower, while reports of attacks, vessel seizures or failed negotiations have quickly restored the supply-risk premium.

Strait of Hormuz Shipping Disruption Drives Supply Fears

The Strait of Hormuz remains at the centre of the market’s concerns. Before the conflict, approximately one-fifth of the world’s oil and liquefied natural gas moved through the narrow waterway separating Iran and Oman.

Shipping activity is now only a fraction of its normal level. Kpler vessel-tracking data showed that just five commodity vessels passed through the strait on Saturday, with no transits registered on Sunday. That compared with 31 vessels during the previous weekend.

The low traffic numbers do not necessarily indicate an immediate loss of every barrel produced in the Gulf. However, they raise transport costs, delay deliveries and discourage shipowners from entering the region. Longer disruptions could eventually force producers to reduce output if storage capacity becomes constrained.

Market anxiety intensified after Iranian media reported that a tanker had been detained for allegedly failing to pay transit fees. The vessel’s name and cargo were not disclosed, and the report could not immediately be independently verified. Nevertheless, it reinforced fears that commercial shipping remains exposed to seizure or attack.

Iran Adopts Harder Position as Ceasefire Framework Expires

The latest escalation followed the expiry of a 60-day negotiation period established under a memorandum signed on June 17. The framework was intended to support a permanent end to military operations and create a broader agreement covering Iran’s nuclear programme, US sanctions and management of the Strait of Hormuz.

Disagreements over control of the waterway prevented the temporary arrangement from producing a lasting settlement. Iran maintains that the memorandum gave it the right to manage the strait, while Washington rejects that interpretation.

A senior Iranian official said the country would be prepared to escalate tensions in the Strait of Hormuz and the wider region if diplomacy failed. The United States, meanwhile, confirmed that it was not seeking to extend the temporary framework.

These developments significantly weakened expectations of a near-term ceasefire. They also increased the risk that future military action could affect energy infrastructure, shipping lanes or production facilities across the Gulf.

Oman Talks and US Back Channels Offer Limited Diplomatic Hope

Iran has continued separate negotiations with Oman over a provisional arrangement for managing shipping through the strait. Tehran has suggested that the two countries are close to an agreement, but no concrete outcome has been announced.

US President Donald Trump responded by warning Oman against obstructing Washington’s approach to the conflict. The threat added uncertainty because Oman has traditionally served as an important intermediary between the United States and Iran.

There are still limited signs that communication channels remain open. Media reports indicate that Washington has established indirect contact with Iran’s Islamic Revolutionary Guard Corps, which holds considerable influence over Iran’s military strategy and the Strait of Hormuz.

Back-channel discussions may reduce the possibility of an accidental escalation, but they do not yet represent a formal peace process. Oil traders are therefore likely to demand a substantial risk premium until an agreement produces a measurable increase in tanker traffic.

Gulf Producers Seek Alternative Export Routes

Regional oil producers are attempting to reduce their dependence on Hormuz. Saudi Aramco has reportedly offered Arab Medium and Arab Heavy crude to some Asian refiners through ship-to-ship transfers near Fujairah in the United Arab Emirates.

The company has also redirected some Arab Light exports towards the Saudi Red Sea port of Yanbu and Egypt’s Mediterranean terminal at Sidi Kerir. These routes allow buyers to receive crude without sending their own tankers through the most dangerous parts of the Gulf.

ADNOC has similarly maintained access to export facilities outside the strait, helping the UAE sell more than 100 million barrels through tenders.

However, these options cannot fully replace the Strait of Hormuz. Pipeline capacity, port availability and the suitability of different crude grades all limit how much oil can be redirected. Continued attacks around the Red Sea and Bab el-Mandeb also complicate the use of western export routes.

What Could Move Oil Prices Next?

The immediate outlook will depend primarily on physical shipping flows rather than political statements alone. A sustained rise in vessel traffic through Hormuz could ease the supply-risk premium, while further tanker attacks or seizures could quickly push crude higher.

Brent’s move above the psychological $90 level and WTI’s test of $85 indicate that buyers remain focused on disruption risks. Holding above these levels could preserve upward momentum, whereas credible diplomatic progress or a reopening of the strait could trigger a rapid reversal.

Traders will also monitor US crude and fuel inventories, regional export data and developments around Bab el-Mandeb. Higher oil prices may eventually weaken demand and increase inflation concerns, but immediate geopolitical risks are currently outweighing those longer-term pressures.