Global oil prices climb back toward $100 a barrel after U.S. launches new strikes in southern Iran despite potential deal

By Isabel Wang and Nora Redmond

U.S. and Iran are still far from reaching a mutually acceptable agreement to end hostilities

The U.S. military said late Monday it launched strikes in "self-defense" on southern Iran.

Global oil prices were creeping back toward the $100-a-barrel mark on Tuesday morning as U.S. strikes in southern Iran and uncertainty surrounding negotiations between Washington and Tehran left investors on edge.

Brent crude futures for July delivery (BRN00) (BRNN26) were up 3% to $99.89 a barrel on Tuesday morning, recovering some of the previous day's losses. The most active August contract (BRNQ26) rose 3%, trading at $96.18 a barrel, according to FactSet data.

West Texas Intermediate crude, the U.S. benchmark, saw its most-active July contract (CL.1) (CLN26) fall by almost 4% to $92.50 a barrel. There was no price settlement on Monday due to shortened trading hours for the U.S. Memorial Day holiday.

The latest move in oil prices came after President Donald Trump announced in a post on Truth Social on Monday that negotiations with Iran were "proceeding nicely," adding that there would either be a "great deal for all, or no deal at all." However, later that day, the U.S. military said it launched strikes in "self-defense" on southern Iran, targeting missile launch sites and vessels around the Strait of Hormuz.

"Traders rushed to cut their long side exposure on increased speculation that the U.S. and Iran were close to agreeing a deal that could bring an end to the war," said David Morrison, senior market analyst at Trade Nation. "The Trump administration made several encouraging noises over the long weekend to keep those hopes alive, but Iranian voices were far more circumspect," he wrote in emailed commentary.

On Tuesday, Iran's Revolutionary Guard Corps said it reserved the "legitimate and definite" right to retaliate against violations of its cease-fire agreement with the U.S., according to a Wall Street Journal report.

Esmail Baghaei, Iran's Foreign Ministry spokesman, told reporters, per the Associated Press, that, although understandings had been reached on many issues, "to say that this means an agreement is on the verge of being signed is not something anyone can claim."

"As we approach the third month of the conflict, every additional day is pushing the physical market toward pain levels not yet seen during this crisis," Ipek Ozkardeskaya, senior analyst at Swissquote, wrote in a note on Tuesday.

"That means heightened volatility and potentially sharp upside moves as markets prepare for a prolonged period of constrained oil supply, while global oil inventories continue to decline at record speed," she said.

-Isabel Wang -Nora Redmond

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