- Iran demands an end to the blockade, compensation and sovereignty over Hormuz.
- OPEC oil production hit a two-decade low in April, a survey shows.
- The United States will lend 53.3 million barrels of oil from the Strategic Petroleum Reserve.
Oil prices rose Tuesday in early Asian trade as negotiations to end the U.S.-Iran war looked fragile, with Tehran’s response to a U.S. proposal highlighting deep differences that kept supply concerns alive.
Brent crude futures rose 30 cents, or 0.29%, to $104.51 a barrel, while U.S. West Texas Intermediate gained 31 cents, or 0.32%, to $98.38 by 0002 GMT. Both benchmarks rose nearly 2.8% on Monday.
US President Donald Trump said on Monday that the ceasefire with Iran was “on life support”, highlighting disagreements over several demands, such as a cessation of hostilities on all fronts, the lifting of the US naval blockade, the resumption of Iranian oil sales and compensation for war damages.
Tehran has also emphasized its sovereignty over the Strait of Hormuz, which handles about a fifth of global flows of oil and liquefied natural gas.
“Until U.S.-Iran negotiations are concluded and physical flows through the Strait of Hormuz remain limited, we should see prices hold above $100,” Tim Waterer, chief market analyst at KCM Trade, said in an email.
“A real move towards a peace deal could trigger a sharp correction to $8-12, while any escalation or further threat of blockade would quickly push Brent back towards $115 and above,” he said.
The disruptions linked to the virtual closure of the strait have encouraged producers to reduce their exports, with a Reuters A survey released Monday shows OPEC oil production in April fell to its lowest level in more than two decades.
Saudi Aramco CEO Amin Nasser warned on Monday that disruptions to oil exports through the strait could delay the return to market stability until 2027, with a loss of around 100 million barrels of oil per week.
Meanwhile, the Trump administration on Monday announced plans to loan 53.3 million barrels of crude from the U.S. Strategic Petroleum Reserve (SPR) as part of efforts to moderate the oil market.
Ship tracking data has shown that a cargo of crude from the USSR is en route to Turkey, marking the first such delivery to the Mediterranean country.
Meanwhile, just days before Trump’s planned meeting with Chinese President Xi Jinping, Washington imposed sanctions on three individuals and nine companies, including companies based in Hong Kong, the United Arab Emirates and Oman, for facilitating Iranian oil shipments to China.
Separately, the Wall Street Journal reported Monday that the United Arab Emirates had carried out military strikes against Iran, including an attack in early April targeting a refinery on the Iranian island of Lavan. The UAE has not publicly acknowledged the strikes, the report said.
