Brent oil prices top $111 per barrel as traders weigh Iran’s Strait of Hormuz proposal

Oil prices rose on Tuesday as investors parsed fresh signals from U.S.-Iran negotiations, with uncertainty over the potential for de-escalation keeping markets on edge. 

Global benchmark Brent crude futures with June delivery traded 2.7% higher at $111.09 per barrel as of 3:20 a.m. ET, extending gains after settling higher for its sixth consecutive positive session on Monday.

U.S. West Texas Intermediate futures with June delivery, meanwhile, advanced 2.2% at $98.50. WTI settled 2.1% higher in the previous session.

U.S. President Donald Trump and his national security team discussed a proposal from Tehran to reopen the Strait of Hormuz, conditional on Washington lifting its blockade and ending hostilities, White House press secretary Karoline Leavitt confirmed. 

U.S. oil prices since the start of the year

It remains unclear whether Trump, who has said sanctions relief would come only once a deal is "100% complete," is willing to consider the proposal as a pathway to de-escalation in the two-month-long conflict.

"I will confirm the president has met with his national security team this morning," Leavitt said at a press briefing Monday afternoon when asked about the reports.

Energy flows through the Strait of Hormuz — which carries about a fifth of the world's oil and liquefied natural gas — remain severely disrupted, with roughly 20 million barrels per day of crude, fuels and petrochemicals affected, according to Andy Lipow, president of Lipow Oil Associates.

Even if hostilities ended immediately, a return to normal market conditions would take months, Lipow said, citing the need to clear mines, ease tanker congestion and gradually restart production and refining.

Factoring in shipping and distribution lags, he estimated it would take at least four to six months for oil markets to stabilize, with prices likely to remain elevated in the interim as inventories approach critical levels.

"The longer the conflict goes on, the higher the price, especially as inventories are drawn down to critical operating levels. If the conflict ended tomorrow, crude oil prices are estimated to drop $10 per barrel," he added.

Absent any new negotiations, the WTI crude oil price will drift back up to $100, with the Brent Crude going over $110, Lipow said.