Brent crude futures experienced an increase of nearly 2% during early on Tuesday, following the U.S. military’s execution of strikes in southern Iran, characterised as defensive measures. This development has contributed to heightened market tension, as a resolution to the ongoing conflict remains unattainable for both parties. Brent futures increased by $1.40, representing a 1.5% rise, reaching $97.56 per barrel as of 0006, following a 7% decline in the prior session. U.S. West Texas Intermediate crude fetched $91.25, reflecting a modest increase from Monday’s last traded price, yet it remains down $5.30, or 5.5%, compared to Friday’s close. There was no settlement on Monday as a result of the U.S. Memorial Day holiday.
The U.S. Central Command reported conducting strikes on targets in southern Iran, which included boats attempting to lay mines and missile launch sites. They stated that these actions were intended “to protect our troops from threats posed by Iranian forces.” On Monday, Iranian media reported the occurrence of explosions in Bandar Abbas and adjacent coastal regions along the Strait of Hormuz. 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% or more. Iran’s chief negotiator and foreign minister engaged in discussions with Qatar’s prime minister in Doha on Monday, focusing on a prospective agreement with the United States aimed at concluding the ongoing three-month conflict.
Both Washington and Tehran have indicated that they have made advancements on a memorandum of understanding aimed at ceasing hostilities, allowing negotiators a period of 60 days to finalise an agreement. Earlier, Nikkei reported, citing a Middle East diplomatic source, 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. “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.
Recent ship-tracking data indicated that three liquefied natural gas tankers navigated through the strait in the past few days, destined for Pakistan, China, and India. Additionally, a supertanker transporting Iraqi crude made its way to China after being immobilised for almost three months. U.S. President Donald Trump on Monday reiterated his insistence that Iran surrender its enriched uranium to the United States for destruction. “It’s a sharp reminder that the deal could still collapse at the eleventh hour, much like the five previous attempts before it,” said Tony Sycamore.