Brent slips as Middle East tensions keep oil traders on edge UPDATED

Brent crude futures edged lower in Tuesday trading, while WTI remained in positive territory as traders continued to assess a stream of developments from the Middle East, including reports affecting oil supplies.

Expectations for a peaceful resolution to the conflict have weakened significantly following the failure of earlier diplomatic efforts.

U.S. President Donald Trump said he did not plan to extend a memorandum of understanding with Iran that expired on August 17. He also said he could not rule out a renewed escalation of the conflict with Iran, a scenario that could push oil prices higher.

A senior Iranian source told Reuters that Tehran could adopt a more “offensive” posture as efforts to resolve the conflict diplomatically have reached an impasse.

By 11:15 GMT, October Brent futures on London’s ICE Futures exchange were down $0.07, or 0.08%, at $90.80 a barrel.

September WTI futures on the NYMEX were up $0.36, or 0.43%, at $84.86 a barrel.

“Trump’s decision not to extend the peace agreement with Iran, as well as continued concerns about security in the Strait of Hormuz, are supporting the oil market,” ING analysts said.

The United Kingdom’s Maritime Trade Operations (UKMTO) reported an incident involving a vessel in the Strait of Hormuz on Tuesday. According to the agency, the vessel was struck by an unidentified projectile while leaving the strait.

Tanker-tracking data showed that Saudi Arabia resumed last week the previously suspended loading of oil within the Strait of Hormuz.

Yemeni news outlet SABA reported that the Houthis had launched a drone attack on a Saudi Aramco refinery in Saudi Arabia’s Jizan province. Jizan lies in the southwest of the country on the Red Sea coast near the border with Yemen.

The developments add to uncertainty over regional supply flows and shipping security, keeping oil markets sensitive to any further escalation around the Strait of Hormuz and the wider Middle East.

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Oil prices rose on Tuesday, August 18, as prospects for a deal to end the Middle East war weakened, with Iran signalling a shift to a more offensive military posture and the United States ruling out an extension of a temporary ceasefire. The developments heightened concerns over potential disruptions to energy supplies.

A senior Iranian official told Reuters on Monday that Iran would adopt a “fully offensive” military posture as efforts to secure a permanent end to the war stalled. Washington, meanwhile, ruled out extending the temporary ceasefire agreement.

Brent crude futures rose 62 cents, or 0.7%, to $91.49 a barrel by 0408 GMT, after climbing on Monday to their highest level since July 30.

U.S. West Texas Intermediate crude futures gained 75 cents to $85.25 a barrel. Earlier in the session, WTI had risen more than 1% to $85.37, its highest since July 31.

Progress toward a peace agreement and the resumption of oil tanker traffic through the strategic Strait of Hormuz have stalled, raising the prospect of a prolonged conflict that began when the United States and Israel launched attacks on Iran on February 28.

“Oil has jumped to start the week as U.S.-Iran relations look increasingly shaky,” said Tim Waterer, chief market analyst at KCM.

“A deal to reopen the Strait of Hormuz still does not appear to be in sight, and shipping numbers remain at a trickle.”

A projectile struck a vessel transiting out of the Strait of Hormuz on Tuesday, marking the latest in a series of attacks that have kept the number of crossings in the single digits, despite a slight increase from levels recorded over the weekend, according to tracking data.

In a separate development, Yemen’s Houthis launched missiles at vessels they described as a Saudi military ship and four escort vessels in the Red Sea, the group’s military spokesperson, Yahya Saree, said on Telegram.

The continuing uncertainty over a ceasefire agreement could keep pressure on oil prices in the months ahead.

“The lack of any kind of deal will have an impact on oil price expectations further out in 4Q and even in 2027,” said Suvro Sarkar, head of energy research at DBS Bank.

While uncertainty over a deal persists, Sarkar expects oil prices to trade in a range of $80 to $100 a barrel in the near term.

By Tamilla Hasanova