Oil Holds Gains on US-Iran Stalemate

WTI crude futures traded near $92 per barrel on Tuesday after surging more than 5% at the start of the month, as ongoing peace talks between the US and Iran showed little progress, keeping markets cautious about supply disruptions. On Monday, Iranian media reported that Tehran had suspended communications with Washington in response to Israeli strikes in Lebanon. The report also indicated that Iran and its regional allies are considering the full closure of the Strait of Hormuz and the Bab el-Mandeb Strait, a key alternative route for global oil shipments. Meanwhile, President Donald Trump said negotiations remain ongoing and noted that a memorandum of understanding with Iran to reopen the Strait of Hormuz could be reached within the next week. Separately, Lebanese authorities called for all Lebanese territory to be covered under any extension of the ceasefire agreement between Hezbollah and Tel Aviv.

Oil prices pared some gains but remained sharply higher on the first trading day of June, with WTI crude futures rising 6% to trade above $92 per barrel. Prices initially surged more than 8% after Iranian media reported that Tehran had suspended communications with Washington in response to attacks in Lebanon and was preparing to fully close the Strait of Hormuz, raising fears of further disruptions to global oil supplies. However, crude moved away from session highs after US President Trump said that Israel and Hezbollah had agreed to halt attacks against each other in Lebanon and that discussions with Iran were continuing. Trump also downplayed Iran's decision to suspend indirect talks, stating that he did not care whether the negotiations were over. Still, market concerns remained elevated as the developments cast doubt on the prospects for an interim peace agreement, particularly amid fresh clashes involving US and Iranian forces near the Strait of Hormuz.

WTI crude oil futures surged more than 7% to above $94 per barrel on Monday after reports that Iran would suspend exchanges of messages with the US in response to Israel’s escalating military operations in Lebanon. According to the semi-official Tasnim news agency, Iran’s negotiating team will halt talks and the exchange of documents through mediators, accusing Washington of sending mixed signals and prolonging negotiations. Earlier in the day, Foreign Ministry spokesperson Esmail Baghaei said Iran remained engaged with the US but continued to do so with “distrust.” The development raised concerns about the prospects for an interim peace agreement, particularly as US and Iranian forces were involved in fresh clashes near the Strait of Hormuz. President Donald Trump nevertheless said talks with Tehran would “work out well,” despite the renewed tensions.