Oil prices rise further as hopes for Hormuz deal fade
Crude has surged around 10 percent over the past week, with the United States and Iran appearing no closer to a deal on the crucial waterway despite upbeat comments from the White House earlier in the month.
Vessels are seen in the Strait of Hormuz, off the port city of Bandar Abbas in southern Iran on August 10, 2026. (AFP)
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HONG KONG - Oil prices extended hefty gains Tuesday as hopes for a reopening of the Strait of Hormuz fade, fanning fresh inflation fears and ramping up bets on at least one US interest rate hike this year.
Crude has surged around 10 percent over the past week, with the United States and Iran appearing no closer to a deal on the crucial waterway despite upbeat comments from the White House earlier in the month.
In the latest blow, Donald Trump said Monday he would seek conflict compensation from Iran as part of any peace negotiations, citing attacks and killings stretching back decades allegedly backed or perpetrated by Tehran.
The US president's announcement was a direct response to Tehran's demand for US war reparations as a precondition to any resolution of the crisis.
Trump's remarks came a day after he said he was "low-keying" his approach to the conflict, suggesting he was prepared to let economic pressure mount in place of further military strikes.
However, the latest back and forth risks putting a quick agreement further out of reach, and on Monday both main crude contracts jumped around five percent. They extended the gains on Tuesday.
"In the absence of any positive headlines on negotiations to reopen the strait, pressure on oil prices has been upward," wrote Jason Wong at BNZ.
And Stephen Innes, global strategist at Quintex Intel, said: "In effect, both sides are trying to weaponise the oil barrel without firing another shot. Washington is trying to choke Iran's ability to get its crude out, while Tehran is squeezing the artery through which everybody else's crude gets through.
"It is quite the game of chicken."
While a surprise loss of more than 20,000 jobs in the US economy last month eased fears of a Federal Reserve hike, a spike in price pressures could force the bank's hand.
Cleveland Fed boss Beth Hammack told Yahoo Finance on Monday: "I would say in general, one 25-basis-point move probably doesn't do a whole lot for the economy.
"So it's probably some number of (movements). But I don't want to prejudge what that number is going to be."
The US-Iran deadlock and rising crude costs comes as traders await the release of consumer price data on Wednesday, which could play a key role in guiding the Fed on its next move.
Asian equities were mixed following a tepid day on Wall Street.
Shanghai, Wellington, Taipei and Manila all edged down, but there were gains in Hong Kong, Sydney, Singapore and Seoul.
Tokyo was closed for a holiday.
Key figures around 0215 GMT
Shanghai - Composite: DOWN 0.5 percent at 3,948.19
Tokyo - Nikkei 225: Closed for holiday
West Texas Intermediate: UP 0.3 percent at $82.40 per barrel
Brent North Sea Crude: UP 0.3 percent at $87.97 per barrel
Euro/dollar: UP at $1.1546 from $1.1543 on Monday
Pound/dollar: UP at $1.3512 from $1.3508
Dollar/yen: DOWN at 159.18 yen from 159.31 yen
Euro/pound: UP at 85.46 pence from 85.45 pence
New York - DOW: DOWN 0.1 percent at 53,975.98 (close)
London - FTSE 100: DOWN 0.4 percent at 10,862.50 (close)