Oil Extends Gains as Brent Boils at $105 Taking Heat From Fragile US-Iran Talks

Mumbai, May 12: Oil prices extended gains on Tuesday, as fragile US–Iran negotiations and renewed supply concerns kept traders on edge, heightening fearsof prolonged disruptions in crude shipments.

Brent crude rose to around $105.1 per barrel, up 0.84% or 88 cents, while US West Texas Intermediate (WTI) climbed to the $99.07, up 1.02% or one dollar. To be sure, both benchmarks rose nearly 2.8% yesterday. The further buildup indicates how sentiment continues to revolve around geopolitics in the Middle East.

Latest Uptick

The latest uptick comes after statements indicating that ceasefire discussions between the United States and Iran remain precarious, with officials describing talks as strained and unresolved. The lack of progress has intensified concerns over supply stability, particularly given the strategic importance of the Strait of Hormuz, through which roughly one-fifth of global seaborne oil flows.

Benchmarks are building up on gains on Tuesday with both having risen nearly 2.8% on Monday. Source: oilprice.com

Oil prices have been reacting sharply to headlines surrounding negotiations, with traders pricing in the risk of further disruptions if diplomacy falters. Brent has recently traded above the $100 mark as geopolitical tensions escalate, reflecting heightened volatility across energy markets.

Broader Backdrop

The broader backdrop remains deeply influenced by the ongoing conflict dynamics in the region. The war has already triggered major supply disruptions, including restrictions in the Strait of Hormuz, which significantly impacted global crude and LNG flows earlier this year. Sustained constraints in this corridor could keep oil prices elevated and amplify inflationary pressures worldwide.

Without clear diplomatic breakthroughs, crude could remain supported above psychologically important levels. And renewed escalation could push prices further higher, especially if physical supply routes are threatened again.

Close Watch

At the same time, traders are closely watching policy responses, including strategic petroleum reserve releases and sanctions-related developments, which could influence supply expectations in the coming weeks. However, for now, the dominant driver remains geopolitical uncertainty rather than demand-side fundamentals.

The surge in oil prices is also reverberating through broader financial markets. Elevated crude tends to raise inflation expectations, complicate central bank outlooks, and weigh on import-dependent economies. For energy-importing nations, including major Asian consumers, higher oil prices risk widening trade deficits and pressuring currencies, adding another layer of macroeconomic sensitivity.

In summary, crude oil markets are being shaped by three intertwined forces: fragile US–Iran talks, restricted supply routes in the Middle East, and persistent concerns about global inflation. Unless negotiations show tangible progress, volatility in energy markets is likely to persist, with prices remaining sensitive to any headline developments.

Source:

• rates from https://oilprice.com/