Oil climbs as US-Iran tensions deepen, raising supply risks
NEW YORK, August 18, 2026 — Oil prices rose on Tuesday as hopes of a deal to end the US-Iran war faded, with Iran saying it would adopt a more offensive military posture and the US ruling out an extension of a ceasefire, heightening concerns over energy supplies.
Iran will shift to a “fully offensive” military posture because efforts to negotiate a permanent end to the war with the US have stalled, a senior Iranian official said on Monday, as Washington ruled out extending a temporary ceasefire agreement.
Progress towards peace talks and the resumption of oil tanker traffic through the strategic Strait of Hormuz has ground to a halt, threatening to prolong the conflict that the US and Israel launched with attacks on Iran on February 28.
Brent crude futures rose 27 cents, or 0.3 percent, to US$ 91.14 a barrel by 0003 GMT, after climbing to their highest level since July 30 on Monday.
US West Texas Intermediate [WTI] crude futures gained 42 cents to US$ 85.04 a barrel, after rising more than 1 percent earlier in the session to US$ 85.37, their highest level since July 31.
“Oil has jumped to start the week as US-Iran relations look increasingly shaky. A deal to reopen the Strait of Hormuz still does not appear to be in sight, and shipping numbers remain at a trickle,” said Tim Waterer, chief market analyst at KCM.
Following attacks on tankers, only five commodity vessels transited the Strait of Hormuz on Saturday, while none was registered for Sunday, according to ship-tracking data from Kpler. That compares with 31 vessels during the previous weekend.
Yemen’s Houthis attacked what they described as a Saudi military ship and four escort vessels in the Red Sea with missiles, according to the group’s military spokesperson, Yahya Saree, on Telegram.
“The dual chokehold on the Strait of Hormuz and the Bab el-Mandeb remains highly significant. These are not secondary concerns. They sit at the centre of the current supply-risk narrative,” Waterer said.
Iran has separately been negotiating an agreement with Oman on managing the Strait of Hormuz and says the two sides are close to a deal. However, US President Donald Trump responded to the negotiations with a threat to bomb the Gulf state, a longstanding US security partner.
In a glimmer of hope for diplomacy, media reports said Trump had opened back-channel discussions with Iran’s Islamic Revolutionary Guard Corps.
US crude oil stockpiles were expected to have fallen last week, alongside product inventories, according to a preliminary Reuters poll conducted on Monday.
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