Oil prices approached $92 per barrel in early trading on Wednesday amid escalating tensions in the Middle East. US President Donald Trump stated that the US is not in discussions with Iran, heightening concerns over supply, despite his assurance that the Strait of Hormuz remains open for traffic. Brent crude futures increased by 57 cents, or 0.6 percent, reaching $91.59, whereas US West Texas Intermediate crude futures surged by 62 cents to $85.56 a barrel, continuing their upward trajectory. Both benchmarks experienced an increase exceeding 5 percent last week following assaults on tankers managed by Abu Dhabi National Oil Company in the Strait of Hormuz, as well as an attack on a Saudi Aramco refinery. A temporary ceasefire agreement between Iran and the US came to an end on Monday.

A senior Iranian official conveyed to Reuters that the nation was transitioning to a “fully offensive” military posture in light of the ongoing diplomatic impasse, although there were no indications of new strikes from either party on Tuesday. As Trump maintained his assertion of control over the Strait of Hormuz with an AI-generated image portraying the strategic waterway as “NEW US Territory,” Iran responded to the US President by cautioning that his claims would be “corrected,” characterising his assertions as delusions. Iranian Deputy Foreign Minister Kazem Gharibabadi characterised Trump as a “deluded man” on Tuesday, noting that while Trump accurately referred to the “eternal Persian Gulf,” his assertions regarding the Strait of Hormuz would soon be rectified, either through circumstances or by Iran itself. “Just as Trump correctly wrote the name of the eternal Persian Gulf, soon his delusion regarding the Strait of Hormuz will either be corrected or we will correct the delusions of this deluded man,” Gharibabadi said in a post on X.

Meanwhile, Trump told that the Strait was open, and oil prices were falling, while warning that Iran was facing severe economic and military pressure. “I think it’s a great idea. I mean, we control it with the blockade. I like the idea of declaring it a territory. We have total control over the Strait,” Trump said. Hopes for peace talks and expectations regarding the resumption of oil tanker traffic through the strategic Strait of Hormuz have significantly diminished, as the involved parties threaten to prolong the conflict initiated by the US and Israel with their attacks on Iran on February 28. JPMorgan projected that each extra month of disruption might contribute approximately $7 to $8 per barrel to Brent prices. If the disruption persists for three months, the bank anticipates average monthly Brent prices to approximate $114 per barrel.

Goldman Sachs has issued a cautionary note indicating that Brent may escalate to $120 a barrel should shipping disruptions persist through the Strait of Hormuz, which is recognised as the most critical oil transit route globally. Goldman Sachs anticipates that tensions in the Middle East will ultimately diminish in accordance with its base case scenario. The Wall Street bank anticipates that Brent will average $80 per barrel in the fourth quarter and $75 per barrel in the following year. It was noted that risks continued to be skewed toward the upside, given that disruptions in the Strait of Hormuz and the Red Sea might persist longer than anticipated.