NY Crude Up 3.1% at US$101.10 and Brent Crude Up 2.9% at Near US$107.25

Scotiabank Notes Markets Highlight Increase in Inflation Risk

Oil prices continue to rally and are back up to where they were last Wednesday before sliding in false anticipation of a United States-Iran deal, said Scotiabank.WTI and Brent are up by about US$3 to US$4/barrel early Tuesday, with Brent at almost US$108, noted the bank. Higher oil prices on Monday and Tuesday follow President Donald Trump's "ineloquent" dismissal of Iran's counteroffer as "a piece of garbage," while saying the ceasefire is "unbelievably weak" and on "massive life support."Bond yields are accordingly higher on a perceived increase in inflation risk, stated Scotiabank. United Kingdom's Gilts are underperforming with borderline double-digit basis point increases at the longer-end, while all other major markets are cheaper by single-digit moves, led by Europe.Gilts have inflation worries and political instability on the mind as Prime Minister Keir Starmer digs in against a rebellious cabinet that is stoking fear that a freer-spending leader could step in, added the bank.Stocks are broadly lower by up to 1% in Germany, it pointed out.The US dollar (USD) is generally firmer against major crosses, but with oil-driven currencies like Norway's krone (NOK) and Canadian dollar (CAD or loonie) outperforming others.Iran has countered with a take-it-or-leave-it posture and noted it was "ready to respond and to teach a lesson for any aggression."And so, with that as the backdrop, it only seems appropriate to talk inflation, according to Scotiabank.

Brent Crude Up 2.8% at Near US$107.20

Crude Oil Prices Climb as Supply Concerns Escalate Amid Lack of Peace Deal

Crude oil prices saw gains on Tuesday amid dissipating hopes that an agreement between the U.S. and Iran to end the war will be reached.Brent crude at last look rose 2.9% to US$107.21/barrel and West Texas Intermediate crude climbed 3.3% to $101.32/barrel. Disagreements persist between the two countries over demands that include the cessation of hostilities, the removal of the U.S. naval blockade, the resumption of Iranian oil sales and compensation for war damage, Reuters said in a Tuesday report."Optimism regarding an imminent (peace) deal seems to be fading again and if we don't see a deal by the end of May, then upside risks for oil prices are definitely on the table," Reuters quoted DBS Bank energy sector team lead Suvro Sarkar as saying.The continued near-closure of the Strait of Hormuz has led to curtailed exports, with a Reuters survey showing that output from the Organization of the Petroleum Exporting Countries fell to its lowest level in over two decades in April, the report said.