Brent oil gains 2% as US military strikes on Iran add to uncertainty on potential peace deal

Brent crude futures rose over 2% in Asian trade on Tuesday after the U.S. military carried out strikes in Iran, keeping markets on edge as a deal to end the war and open up the Strait of Hormuz remained elusive.

Brent futures were up $1.98, or 2.1%, to $98.12 a barrel as of 0405 GMT, after settling 7% lower in the previous session.

U.S. West Texas Intermediate crude was at $91.79 a barrel, up slightly from Monday’s last traded price but down $4.81, or 5%, from Friday’s close. There was no settlement on Monday due to the U.S. Memorial Day holiday.

While both contracts fell during the overnight session on hopes of a peace deal, the U.S. strikes in southern Iran and Israeli attacks on Hezbollah have boosted Brent ⁠prices and widened the spread with WTI, said Michael McCarthy, CEO of online trading platform Moomoo Australia.

U.S. Secretary of State Marco Rubio said on Tuesday that negotiating a deal with Iran could ‘‘take a few days,’‘ quashing hopes for an imminent end to the conflict a day after U.S. forces conducted what Washington called defensive strikes in southern Iran.

Tehran has effectively halted nearly all non-Iranian shipping into and out of the Gulf via the Strait of Hormuz since the war began, choking off about a fifth of global oil and liquefied natural gas flows.

The strikes happened as Iran’s top negotiator and its foreign minister were in Doha for talks with Qatar’s prime minister on a potential deal with the U.S. to end the three-month-old ⁠war.

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.

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, chief market analyst at KCM Trade.

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 that had been stranded for nearly three months.

U.S. President Donald Trump on Monday repeated his demand that Iran hand over its ⁠enriched uranium so it could be destroyed.

‘‘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, a market analyst at IG.

Source: Reuters 
--Agencies