Oil prices continued to rise on Tuesday as hopes for a quick reopening of the Strait of Hormuz weakened, raising concerns over inflation and the possibility of higher US interest rates.
Crude oil has climbed more than 10 per cent over the past week, with the United States and Iran appearing no closer to reaching an agreement over the crucial waterway.
US President Donald Trump said on Monday that he would seek conflict compensation from Iran as part of any peace negotiations. He cited attacks and killings that he said had been backed or carried out by Tehran.
Trump’s comments came after Iran demanded US war reparations as a condition for resolving the crisis.
The US president had said a day earlier that he was taking a less aggressive approach to the conflict, suggesting that economic pressure could be used instead of further military strikes.
The latest developments have raised concerns that an agreement to reopen the Strait of Hormuz could be delayed.
Both major crude oil contracts rose by about 5 per cent on Monday and gained more than 2 per cent on Tuesday, with Brent crude moving back towards US$90 a barrel.
BNZ analyst Jason Wong said the lack of positive developments in negotiations to reopen the strait was putting upward pressure on oil prices.
Higher oil prices have also revived concerns about inflation and increased expectations of US interest rate increases.
The US-Iran deadlock comes as traders await US consumer price data due on Wednesday, which could influence the Federal Reserve’s next interest rate decision.
The developments are being closely watched by financial markets as continued uncertainty over the Strait of Hormuz puts pressure on oil prices and could add to inflation concerns.
