Key Takeaways

• Crude rockets higher: Brent crude rose 2.9% to $107.17 per barrel, while WTI advanced 3.3% to $101.35 — extending Monday’s near 3% gains.
• Trump’s stark warning: The president said the U.S.-Iran ceasefire is on “life support” after rejecting Tehran’s response as “a piece of garbage.”
• War return weighed: CNN reports Trump is seriously considering resuming major combat operations against Iran.
• Iran’s defiance: Tehran’s counteroffer focuses on ending the war, lifting the U.S. naval blockade, and restoring Hormuz shipping.
• Tehran’s demands: Iran wants compensation for war damage, sanctions removed, and recognition of its sovereignty over the strait.
• Aramco’s bombshell: CEO Amin Nasser warned that even if Hormuz reopened immediately, global oil flows could take months to normalize.
• Hopes dashed: Last week’s diplomatic breakthrough optimism has largely faded.
• CPI day: U.S. inflation data is expected to show acceleration as fuel costs feed through to consumer prices.
• PPI ahead: Wednesday’s producer prices report is expected to show mounting price pressures.
• Fed implications: Higher inflation reinforces expectations that rates will stay “higher for longer.”
• Trump-Xi summit pivotal: Beijing talks this week may shape the conflict’s direction given China’s status as Iran’s largest oil buyer.

Oil prices climbed on Tuesday, extending gains of nearly 3% in the previous session, after U.S. President Donald Trump said the fragile ceasefire with Iran was on “life support” — denting hopes for an imminent peace agreement.

As of 05:32 ET (09:32 GMT), Brent crude futures, the global oil benchmark, rose 2.9% to $107.17 a barrel, while U.S. West Texas Intermediate crude futures advanced 3.3% to $101.35 a barrel.

Ceasefire at Breaking Point

Market sentiment remained dominated by fears that the more than two-month-old war in the Middle East could further tighten global supply, particularly after Trump rejected Tehran’s latest response to an American peace proposal, calling it “totally unacceptable.” He described Tehran’s reply as “a piece of garbage,” adding that the truce was now at its weakest point.

Iran defended its position on Monday, saying its counteroffer was focused on ending the war, lifting an ongoing U.S. naval blockade, and restoring shipping traffic through the Strait of Hormuz. Tehran has also demanded compensation for war damage, the removal of sanctions, and recognition of its sovereignty over the strait.

A CNN report late Monday said Trump is seriously considering resuming major combat operations against Iran as peace negotiations have dithered. The comments renewed concerns over the future of shipping through the Strait of Hormuz — a vital chokepoint through which roughly one-fifth of global oil and fuel supply passes.

Saudi Aramco Chief Executive Amin Nasser warned this week that even if the waterway reopened immediately, it could still take months for global oil flows to normalize. Oil retreated temporarily last week on expectations that Washington and Tehran may be moving closer to a diplomatic breakthrough, but those hopes have since largely faded.

Traders Await U.S. CPI Data, Trump-Xi Meeting

Investors are also closely watching U.S. inflation data later on Tuesday, with economists expecting the U.S. consumer price index for April to accelerate as soaring fuel costs linked to the Iran conflict feed through to gasoline-pump prices.

U.S. producer prices figures due on Wednesday are also expected to show mounting price pressures from higher gasoline and transportation costs.

Higher inflation could complicate the Federal Reserve’s policy outlook by reinforcing expectations that U.S. interest rates will stay higher for longer.

At the same time, traders are looking ahead to Trump’s meeting with Chinese President Xi Jinping in Beijing later this week, where discussions are expected to include Iran, trade, artificial intelligence, and global energy security.

Analysts said the talks could play a key role in determining the direction of the Iran conflict, given that China remains Iran’s largest oil buyer and retains significant diplomatic leverage with Tehran.