Oil prices moved higher on Tuesday as fading expectations for a U.S.-Iran peace agreement renewed concerns that disruptions to Middle Eastern oil supplies could persist. Brent crude settled at $88.91 per barrel, up $1.19, or 1.4%, while West Texas Intermediate (WTI) settled at $83.20, up $1.07, or 1.3%. Both benchmarks reached their highest closing levels since July 31 for a second consecutive session.
The primary support for prices remains the continued disruption to shipping through the Strait of Hormuz, which handled roughly 20% of global oil supplies before the conflict began on February 28. Iranian officials indicated that the waterway will remain closed unless the United States changes its position and accepts Iran’s conditions for ending the war. Shipping traffic has fallen sharply, with only six vessels passing through the strait on Monday compared with a 10-day average of about 11 and a pre-war average of 125 to 140 vessels per day.
Supply risks are also spreading beyond the Strait of Hormuz. Iran-aligned Houthi forces attacked a Saudi vessel in the Bab el-Mandeb, while continued attacks on energy infrastructure in Libya and Russia are adding further uncertainty to global crude availability. The EIA also warned that some Middle Eastern producers could struggle to restore production to pre-conflict levels through the end of 2027, even if trade patterns normalize early next year.
Despite the ongoing supply concerns, the market remains focused on diplomatic developments and U.S. inventory data. Analysts expect U.S. crude inventories to have declined by approximately 500,000 barrels during the week ended August 7. If confirmed, it would mark the second inventory draw in three weeks. Brent prices remain approximately 44% higher year-to-date, reflecting the substantial geopolitical and supply disruption premium currently embedded in the market.