Oil prices rise to one-week high as Iran reviews US proposal to halt war
Iran has effectively halted most non-Iranian shipping in and out of the Gulf since the war began
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[NEW YORK] Oil prices climbed about 1 per cent to a one-week high in volatile trade on Tuesday (Jun 2) as the market waited for news on the Iran war, with Teheran reviewing a proposed agreement with the US to halt the conflict.
Brent futures rose US$1.02, or 1.1 per cent, to settle at US$96.00 a barrel, while US West Texas Intermediate (WTI) crude rose US$1.60, or 1.7 per cent, to settle at US$93.76.
Those were the highest closes for both benchmarks since May 26.
Iran is examining the proposed deal with the US to halt their war but has not communicated with Washington for a few days, Iranian media reported on Tuesday, though US President Donald Trump said that negotiations had been going on continuously.
More than three months after the US and Israel launched strikes against Iran, the conflict is stuck in a stalemate, with a shaky ceasefire in place while the pivotal Strait of Hormuz remains largely shut to maritime traffic.
Iran has effectively halted most non-Iranian shipping in and out of the Gulf since the war began, choking off about a fifth of global oil and liquefied natural gas flows and driving prices up by 50 per cent or more. The US has also maintained a blockade on Iranian ports.
“The (oil) complex continues to gyrate wildly amid conflicting comments out of the White House and Iran as well as between Trump and (Israeli Prime Minister Benjamin) Netanyahu,” analysts at energy advisory firm Ritterbusch and Associates said in a note.
“There are still various moving parts to this drama, but at the end of the day a significant reopening of the Strait of Hormuz does not appear much closer than was the case a couple of months ago,” Ritterbusch said.
Trump said on Monday that negotiations were continuing and there would be a deal over the next week to extend a ceasefire agreed to in April and reopen the strait.
US Secretary of State Marco Rubio told lawmakers on Tuesday that Iran has agreed to negotiate aspects of its nuclear programme that it previously refused to discuss, but said that was not a guarantee that negotiations would lead to a deal.
Iran’s semi-official Fars agency, citing a source, said that messages on the possible deal, or memorandum of understanding, had stopped a few days ago, with the last one being Teheran’s “clear message” over Lebanon. Iran is seeking a stop to Israel’s incursion against its ally Hizbollah. Israel kept up strikes on southern Lebanon on Tuesday, pressing its campaign against Hizbollah a day after Trump asked Netanyahu not to attack Beirut to avert further escalation in the three-month war.
Global stockpiles falling
Global oil inventories could hit critical levels ahead of the peak summer demand period if stock draws continue at their current pace, the head of the International Energy Agency’s oil industry and markets division said on Tuesday.
Oil traders in the US were waiting for weekly storage reports from the American Petroleum Institute (API) trade group later on Tuesday and the US Energy Information Administration (EIA) on Wednesday.
Analysts estimated that energy firms pulled four million barrels of crude from storage during the week ended May 29.
If correct, that would be the first time energy firms pulled crude out of storage for six weeks in a row since January 2025. There was a decrease of 4.3 million barrels in the same week last year and an average decline of 2.7 million barrels over the past five years (2021 to 2025). REUTERS
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