WASHINGTON (dpa-AFX) - Extending the gains from yesterday, crude oil prices have catapulted further on Tuesday amid concerns of re-escalation in the Middle East conflict following the U.S. rejection of Iran's peace proposal and reports of U.S. plans to restart the war.
WTI Crude Oil for June month delivery was last seen trading up by $4.11 (or 4.03%) at $102.10 per barrel.
Soon after the U.S.-Israel's war against Iran broke out on February 28, Iran effectively shut down the Strait of Hormuz.
After announcing a ceasefire on all attacks on Iran, U.S. President Donald Trump ordered a naval blockade on ships entering or exiting Iranian ports.
Last week, the U.S. offered a 14-point peace plan for Iran to end the hostilities to which Iran sent its response through Pakistan.
On Sunday, Trump called Iran's reply 'totally unacceptable.' while Iran claimed the U.S. was making 'excessive demands.'
Later, Trump stated that he did not even read Iran's document fully and added that he felt the ceasefire is now on 'life support' with hardly '1% chance of living'.
Iran said the U.S. must abandon its 'one-sided approach' and consider accepting Iran's legitimate demands.
Citing sources close to Trump, CNN reported that he is frustrated with the way Iran's regime is dealing with the dialogue process and added that he is seriously considering restarting major combat operations against Iran.
The strong exchange of rhetoric between both nations and both sides rejecting each other's negotiation proposals have increased concerns of war.
With the escalation apparently set to deepen, crude oil prices resurged from yesterday's price, driving inflationary concerns higher.
However, investors have not given up their expectations of an end to the hostilities with their attention focused on Trump's visit to China, where he will meet Chinese President Xi Jinping.
China being an ally of Iran and having imported 90% of Iran's oil last year, traders are anticipating positive development on the U.S.-Iran crisis in this meeting.
Energy experts have already warned of a rapid depletion in the crude oil inventories if the crisis continues through the end of June.
Yesterday, the Chief Executive Officer of Aramco, Amin Nasser cautioned that even if flows resume through the Hormuz strait immediately, oil markets would take a few months to rebalance, and if the flow remains curtailed for a few more weeks, markets would normalize only in 2027.
The U.S. has released 53.30 million barrels of oil from its Strategic Petroleum Reserve to energy firms in an effort to stabilize oil prices.
The U.S. Bureau of Labor Statistics revealed that core consumer prices, rose by 0.40% from the previous month in April, exceeding market expectations of a 0.30% increase. This jump indicates the spread of higher energy prices from the gulf war to core areas of the consumer basket.
The annual core inflation rate (excluding food and energy) rose to 2.80% in April from 2.60% in the previous month.
Consumer prices increased by 0.60% month-over-month in April, in line with market expectations, following a 0.90% surge in March. Due to the ongoing war and the closure of the Strait of Hormuz, energy prices jumped 3.80% in April, after a 10.90% spike in the previous month.
The annual inflation rate accelerated to 3.80% in April, the highest since May 2023.
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