Oil prices jump on latest US-Iran peace process impasse

Oil prices rose by about 3  percent on Tuesday as stark differences ‌between the US and Iran on a proposal to end the war in the Middle East pushed supply concerns back into the spotlight.

Brent crude futures gained $2.85, or 2.7  percent, to $107.06 a barrel by 0931 GMT and US West Texas Intermediate was up $3.13, or ​3.2  percent, at $101.20. Both benchmarks climbed nearly 3  percent on Monday.

Oil prices moved higher after President Trump ​cast doubt on the durability of the ceasefire with Iran, prolonging uncertainty around the ⁠Strait of Hormuz and global energy supplies, said MUFG analyst Soojin Kim.

US President Donald Trump said on Monday ​that the ceasefire was on "life support", pointing to disagreements over demands such as the cessation of hostilities on all ​fronts, the removal of a US naval blockade, the resumption of Iranian oil sales and compensation for war damage.

Iran also emphasised its sovereignty over the Strait of Hormuz, through which about a fifth of global oil and liquefied natural gas flows.

Disruptions ​linked to the near-closure of the strait have prompted producers to curtail exports, with a Reuters survey ​on Monday showing OPEC oil output in April fell to its lowest level in more than two decades.

"A genuine breakthrough towards ‌a ⁠peace deal could trigger a sharp $8 to $12 correction, while any escalation or renewed blockade threats would quickly push Brent back toward $115-plus," said KCM Trade analyst Tim Waterer.

Saudi Aramco CEO Amin Nasser had warned on Monday that disruptions to oil exports through the strait could delay a return to market stability until 2027, with the ​loss of about 100 million ​barrels of oil per ⁠week.

Elsewhere on the supply front, US crude stocks were estimated to have dropped by about 1.7 million barrels last week, a Reuters poll of analysts showed.

Walt ​Chancellor, energy strategist at Macquarie Group, said that strong waterborne export flows of ​crude and products ⁠are likely for the next several weeks.

Market participants were also keeping a close eye on President Trump's planned meeting with Chinese President Xi Jinping on Thursday and Friday after Washington imposed sanctions on three individuals and nine companies for ⁠facilitating ​Iranian oil shipments to China.

Tariffs imposed during the US-China trade war ​have halted most Chinese imports of US oil and LNG, which were worth $8.4 billion in 2024, the year before Trump began his second ​term.