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US Oil Update: Crude Rally Continues as Peace Hopes Fade

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Oil futures extended gains on Tuesday as the global oil market braced for prolonged supply disruptions following a diplomatic collapse between the US and Iran.

The Brent futures contract gained over 3.6% to $107.96 per barrel. West Texas Intermediate futures gained about 3.7% to $101.70/bbl.

"Oil prices climbed for a second day as the global oil market continued to tighten amid limited prospects for a reopening of the Strait of Hormuz," Saxo Bank analysts said.

Speaking to reporters at the White House, the US president explicitly rejected Tehran's demands for an end to the US naval blockade and war reparations, stating that the current ceasefire is now on "massive life support."

The rally was amplified by new US sanctions targeting the Islamic Revolutionary Guard Corps oil-shipping network, further dimming hopes for a reopening of the Strait of Hormuz.

Treasury officials alleged that the IRGC used front companies across Oman, Hong Kong, and the UAE to bypass sanctions and fund regional operations.

The market turned its attention to upcoming monthly reports from the Energy Information Administration and OPEC for clarity on the massive inventory draws caused by the ongoing Middle East conflict.

These reports will be critical in assessing the long-term impact of the 10-week conflict on global reserves, which have already seen significant draws as refineries scramble to replace Middle Eastern barrels, analysts noted.

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