Key Moments
- Brent crude traded at $69.32 and U.S. WTI at $64.51 by 1307 GMT, extending the prior session’s gains.
- Heightened concern over traffic through the Strait of Hormuz kept a geopolitical risk premium in crude prices.
- The European Union moved to toughen sanctions on Russian oil flows, while Indian Oil Corp shifted purchases toward West Africa and the Middle East.
Market Overview
Oil futures advanced on Tuesday as investors continued to assess the potential for supply disruptions linked to U.S.-Iran tensions, particularly around shipping activity in the Strait of Hormuz.
| Contract | Price | Move | Percentage Change | Time (GMT) |
|---|---|---|---|---|
| Brent crude futures | $69.32 per barrel | +$0.28 | +0.4% | 1307 |
| U.S. West Texas Intermediate (WTI) | $64.51 per barrel | +$0.15 | +0.2% | 1307 |
Both benchmarks built on gains of more than 1% from Monday, as the geopolitical backdrop remained a primary driver of sentiment.
Strait of Hormuz Guidance and Geopolitical Risk
The latest support for prices followed new guidance from the U.S. Department of Transportation’s Maritime Administration for U.S.-flagged commercial ships moving through the Strait of Hormuz. The advisory urged vessels to keep as much distance as possible from Iranian territorial waters and to issue a verbal refusal if Iranian forces request permission to board.
Market participants continued to center their attention on the standoff between Washington and Tehran.
“The market is still focused on the tensions between Iran and the U.S.,” said Tamas Varga, oil analyst at brokerage PVM.
Varga added, “But unless there are concrete signs of supply disruptions, prices will likely start going lower.”
The Strait of Hormuz, situated between Oman and Iran, is a critical energy chokepoint, with about a fifth of the world’s oil consumption moving through the passage. Any escalation in this corridor poses a significant threat to global crude flows.
Iran, along with other OPEC producers Saudi Arabia, the United Arab Emirates, Kuwait and Iraq, ships the majority of its crude exports through the strait, primarily bound for Asian buyers.
Nuclear Talks and Risk Premium
The U.S. shipping guidance came even as diplomatic signals from Iran suggested a more constructive tone. The article noted that Iran’s top diplomat recently said Oman-mediated nuclear discussions with the United States were off to a “good start” and were expected to continue.
Goldman Sachs analysts, in a note on Tuesday, highlighted the role of geopolitics in underpinning crude prices, pointing to an increase in oil held on vessels as buyers move to secure additional supplies amid elevated uncertainty.
IG analyst Tony Sycamore stated: “While talks in Oman produced a cautiously positive tone, a modest risk premium has been kept intact by lingering uncertainty over potential escalation, sanctions tightening or supply disruptions in the Strait of Hormuz.”
EU Sanctions and Russian Oil Flows
Beyond the Middle East, policy developments in Europe also featured in the broader supply narrative. According to a proposal document seen by Reuters, the European Union has put forward a plan to broaden its sanctions on Russia to include ports in Georgia and Indonesia that handle Russian crude shipments. This would be the first instance of the bloc extending such measures to ports in third countries.
The initiative is positioned as part of a wider strategy to constrain Russian revenue linked to the conflict in Ukraine.
Indian Buying Patterns Shift
On the demand and trade side, Indian Oil Corp has purchased six million barrels of crude from suppliers in West Africa and the Middle East, according to traders cited in the article. The buying pattern reflects India’s move away from Russian barrels amid New Delhi’s effort to secure a trade agreement with Washington.
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