Oil rose for a third day as a fresh exchange of strikes between the US and Iran cast doubt on the prospects of a peace deal that would reopen the Strait of Hormuz.
Brent crude climbed above $98 a barrel in London, extending its gain so far this week to about 7%. US forces intercepted Iranian ballistic missiles and drones aimed at neighboring Middle East countries and struck a command center in the Islamic Republic in response.
That came after 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 Israel’s military escalation against Iran-backed Hezbollah 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 through the vital chokepoint to fully resume.
“Uncertainty is the name of the game right now — but the chances of a believable peace deal remain low as long as there is no agreement on Iran’s highly enriched uranium, the Strait of Hormuz itself and Lebanon,” said Rabobank energy strategist Florence Schmit.
Iran fired ballistic missiles at Kuwait and Bahrain — which broke apart en route or were downed by air defenses, US Central Command said in a post on X. American forces also conducted strikes on the Islamic Republic’s Qeshm Island, it said in a separate post.
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.
In Russia, air defenses shot down 50 drones over the Leningrad region around St. Petersburg, Governor Alexander Drozdenko said. Ukrainian President Volodymyr Zelenskyy said on a post on the X platform that his forces had struck the Petersburg Oil Terminal and military targets at Russia’s Kronstadt naval base.
“Attacks on Russian oil infrastructure are adding to this pessimistic outlook for oil,” Schmit said.
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.
“Clients are tired,” Daan Struyven, co-head of global commodities research at Goldman Sachs Group Inc., said on Bloomberg TV. “It’s a challenging trading environment with headlines moving prices up and down. Positioning in oil markets is significantly more limited.”
Elsewhere, a US industry report showed nationwide crude stockpiles fell 6.8 million barrels last week. That would be the sixth straight drawdown if confirmed by official data due later Wednesday.
