Oil rebounds as Iran denies US talks, Strait of Hormuz risks persist

Oil prices climbed on Tuesday morning as markets absorbed a sharp contradiction: President Trump had announced a five-day pause in threatened strikes on Iranian power plants and claimed productive talks with Iranian officials, but Tehran flatly denied any such negotiations had taken place. The denial sent traders scrambling to recalibrate their bets on what comes next.

Brent crude futures rose $1.06 to $101 a barrel, a gain of 1.1 percent, while West Texas Intermediate climbed $1.58 to $89.71, up 1.8 percent. The moves came after crude had plummeted more than 10 percent on Monday when Trump's announcement of the temporary halt to military action had flooded markets with relief. That relief, it turned out, was premature. Iran's Revolutionary Guards dismissed Trump's claims as a manipulation tactic designed to move financial markets and announced they had launched fresh attacks on U.S. targets, calling the president's statements "worn-out psychological operations."

The core issue driving prices upward is the Strait of Hormuz, the narrow waterway through which roughly one-fifth of the world's oil and liquefied natural gas normally flows. The ongoing conflict has essentially shut down that passage. Two tankers bound for India did manage passage on Monday, a small sign that the strait is not completely impassable, but the broader picture remains one of severe constraint. Tim Waterer, chief market analyst at KCM Trade, captured the market's mood plainly: by pausing the threatened strikes, the U.S. had removed much of the immediate "war premium" from prices, but traders knew the missiles were merely on hold, not gone. "Today's moderate bounce is just the market finding its footing in the mud," Waterer said. "Traders are aware that while the missiles are on hold, the Strait of Hormuz is still far from a clear waterway."

Analysts at Macquarie offered a more structured view of the price landscape. Even if tensions ease following Trump's announcement, they expect a price floor of $85 to $90 per barrel, with a natural drift back toward $110 as long as the strait remains effectively closed. If the disruption persists through the end of April, Brent could spike to $150 per barrel. The war has already damaged energy infrastructure across the region. In recent strikes, a gas company office and a pressure-reduction station were hit in Isfahan in central Iran, while a projectile struck a gas pipeline feeding a power station in Khorramshahr, according to Iran's semi-official Fars news agency.

The U.S. has temporarily waived sanctions on Russian and Iranian oil already in transit to ease global shortages, a move that has prompted traders to offer Iranian crude to Indian refiners at a premium to international benchmarks. The International Energy Agency, meanwhile, is consulting with Asian and European governments about possible additional releases from strategic reserves if supply pressures worsen. At an energy conference in Houston, oil executives and energy ministers warned of the conflict's longer-term economic consequences, though U.S. Energy Secretary Chris Wright sought to downplay the severity of the crisis. The market's message was clearer: until the Strait of Hormuz reopens and the threat of further strikes recedes, oil prices will remain volatile and elevated, anchored by genuine supply risk rather than speculation.