LONDON, May 12 — Oil prices rose in early Asian trade on Tuesday as negotiations to end the war between the United States (US) and Iran appeared fragile, with Tehran’s response to a US proposal highlighting stark differences that kept supply concerns alive.
Brent crude futures were up ¢30, or 0.29 per cent, at US$104.51 per barrel, while U.S. West Texas Intermediate gained ¢31 cents, or 0.32 per cent, to US$98.38 by 0002 GMT. Both benchmarks increased nearly 2.8 per cent on Monday.
On Monday, US President Donald Trump said that the ceasefire with Iran was "on life support," pointing to disagreements over several demands, such as the cessation of hostilities on all fronts, the removal of a US naval blockade, the resumption of Iranian oil sales, and compensation for war damage.
Tehran also emphasised sovereignty over the Strait of Hormuz, which handles about a fifth of global oil and liquefied natural gas flows.
"As long as the US-Iran negotiations remain inconclusive and physical flows through the Strait of Hormuz stay restricted, we should see prices holding above US$100.
"A genuine breakthrough toward a peace deal could trigger a sharp US$8-US$12 correction, while any escalation or renewed blockade threats would quickly push Brent back toward US$115+," said KCM Trade chief market analyst Tim Waterer in an email.
Disruptions linked to the near-closure of the strait have prompted producers to curtail exports, with a Reuters survey on Monday showing the Organisation of the Petroleum Exporting Countries' oil output in April fell to its lowest level in over two decades.
On Monday, Saudi Aramco chief executive officer Amin Nasser warned that disruptions to oil exports through the strait could delay a return to market stability until 2027, resulting in the loss of about 100 million barrels of oil per week.
Meanwhile, on Monday, the Trump administration announced plans to release 53.3 million barrels of crude from the US Strategic Petroleum Reserve (SPR) as part of efforts to temper the oil market.
Ship-tracking data showed that a shipment of crude from the US SPR is en route to Turkiye, marking the first such delivery to the Mediterranean nation.
At the same time, just days ahead of Trump's planned meeting with Chinese President Xi Jinping, Washington imposed sanctions on three individuals and nine companies, including firms based in Hong Kong, the United Arab Emirates (UAE), and Oman, for facilitating Iranian oil shipments to China.
Separately, on Monday, the Wall Street Journal reported that the UAE conducted military strikes on Iran, including an attack in early April targeting a refinery on Iran's Lavan Island. Abu Dhabi has not publicly acknowledged the strikes.
