Brent crude futures rose nearly 2 per cent in early Asian trade on Tuesday after reports of fresh US military strikes against Iran, according to Investing.com. Brent oil futures for July opened up nearly 2% at $97.84 a barrel by 20:03 ET (00:03 GMT), while West Texas Intermediate crude futures rose 1.2% to $91.40/barrel. This follows Brent's nearly 3% decline on Monday after earlier reports of a potential framework deal to end the war and reopen the Strait of Hormuz. US West Texas Intermediate crude fetched $91.25, up slightly from Monday's last traded price but down $5.30, or 5.5 per cent from Friday's close.
Reports on Monday evening said the US had launched fresh strikes against missile launch sites and mine-laying boats in southern Iran, as reported by Investing.com. The US military claimed the strikes were in 'self defense' and that a ceasefire with Iran remained in place. The strikes were designed 'to protect our troops from threats posed by Iranian forces' according to the US military command. Iranian media had reported on Monday that explosions were heard in Iran's Bandar Abbas and nearby coastal areas along the Strait of Hormuz, adding to market uncertainty. Tehran's response to the fresh hostilities was not immediately clear, but any renewed military action stands to complicate ongoing peace negotiations.
Tehran has effectively halted nearly all non-Iranian shipping into and out of the Gulf since the war began, choking off about a fifth of global oil and gas flows and driving prices up by 50 per cent or more, according to Business Standard. Ship-tracking data showed that three liquefied natural gas tankers passed through the strait in recent days, heading to Pakistan, China and India, along with a supertanker carrying Iraqi crude to China after being stranded for nearly three months. The situation has kept markets on edge as a deal to end the war eludes both sides.
Iran's top negotiator and its foreign minister were in Doha on Monday for talks with Qatar's prime minister on a potential deal with the US to end the three-month-old war, as reported by Business Standard. Both Washington and Tehran said they have made progress on a memorandum of understanding that would halt the war and give negotiators 60 days to reach a final deal. Earlier reports citing a Middle East diplomatic source indicated that Iran would clear mines from the strait within a 30-day window under the agreement, after which vessels from all countries could navigate freely and safely, with Tehran also ending transit fee collection. However, U.S. President Donald Trump had on Monday flagged progress in negotiations with Iran, and claimed that the Islamic republic will hand over its enriched uranium holdings.
Traders are betting heavily that a breakthrough will finally free up the long-paralyzed tankers stuck in and around the Strait of Hormuz, said Tim Waterer, chief market analyst at KCM Trade, according to Business Standard. However, market analyst Tony Sycamore noted that 'it's a sharp reminder that the deal could still collapse at the eleventh hour, much like the five previous attempts before it.' The renewed military action largely offset earlier reports of a framework deal, with oil prices having fallen sharply on Monday following those reports, although a lack of clarity on the front limited crude's decline. Recent reports suggest that bullish bets in global benchmark Brent crude oil dipped last week after investors took President Donald Trump's move to pause a planned strike.
