Oil Extends Gain on Doubts Over Hormuz Deal Despite Upbeat Tone
(Bloomberg) -- Oil advanced for a sixth day on skepticism about the prospects for a deal that would restore energy flows through the Strait of Hormuz, despite an upbeat assessment from some officials.
Brent traded around $90 a barrel after jumping 12% over the previous five sessions, while West Texas Intermediate was above $84. Futures have been sensitive to headlines on efforts to reopen the crucial waterway, repeatedly swinging between optimism that a deal is near and indications that progress has stalled.
US President Donald Trump added to the uncertainty late Tuesday, telling reporters that “we totally control” Hormuz and that he doesn’t trust Iran. The comments followed his sweeping new demands of the Islamic Republic this week, after Tehran reiterated requests for reparations in talks aimed at winding down the five-month war.
Prior to Trump’s comments, Pakistan’s defense minister said Washington and Tehran are “close to some sort of arrangement” on the strait. Talks on Hormuz between Iran and Oman have also reached an advanced stage, Al Jazeera reported, citing a Qatari foreign ministry spokesperson.
“The rise in oil prices suggest markets remain skeptical that an imminent deal will restore flows through the Strait of Hormuz,” Vivek Dhar, a commodities analyst at Commonwealth Bank of Australia, wrote in a note. Depletion of global inventories threatens to push Brent toward $100 a barrel, he added.
Brent has surged almost 50% this year, while some product prices have rallied even harder, with diesel also advancing from the impact of the Russia-Ukraine war. The US expects oil disruptions stemming from the Iran conflict to reach about 600,000 barrels a day through the end of 2027, according to the Short-Term Energy Outlook from the Energy Information Administration.
Tensions around Hormuz remain elevated, with a US Navy helicopter firing two Hellfire missiles at a Panama-flagged cargo vessel that was attempting to breach a blockade of Iranian ports. Hostilities have also spread to the Red Sea, where Iran-backed Houthis have targeted ships and energy infrastructure.
Visible traffic through Hormuz is down to a trickle, but some oil is exiting the Gulf, often on tankers with their transponders switched off. US Energy Secretary Chris Wright said in a social media post that almost 9 million barrels a day is crossing the strait with US military assistance.
Separately, the industry-funded American Petroleum Institute reported US crude inventories expanded by 9.1 million barrels last week, according to a document seen by Bloomberg. If confirmed by official data on Wednesday, that would be the biggest increase since February.
Further insight into global market conditions will come later Wednesday from the International Energy Agency and the Organization of the Petroleum Exporting Countries, which are scheduled to issue their monthly reports.
It’s “hard to have any conviction,” said Helge Andre Martinsen, a senior oil analyst at DNB Bank ASA. The market is “very headline driven.”
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