Oil surges past $110 as Iran tensions threaten global supply

Global oil prices spiked above $110 per barrel on Tuesday, driven by mounting concerns that diplomatic efforts between the United States and Iran have stalled, raising fears of prolonged disruption in the critical Strait of Hormuz.

Brent crude, the international oil benchmark, climbed by 2.7 per cent to $111.2 per barrel in early trading, while West Texas Intermediate (WTI), the U.S. benchmark, rose 2.3 per cent to $98.5.

The surge marks the highest level in about three weeks and reflects growing anxiety in the energy market over geopolitical uncertainty in the Middle East.

The price rally follows signals that negotiations to ease tensions between Washington and Tehran may not yield immediate results.

Donald Trump reportedly indicated reluctance to accept Iran’s latest proposal aimed at ending hostilities and reopening the Strait of Hormuz, a vital artery for global oil shipments.

Iran’s proposal, according to sources familiar with the matter, includes reopening the strategic waterway while deferring contentious issues surrounding its nuclear programme to future negotiations. However, the lack of agreement has heightened fears that supply disruptions could persist.

The Strait of Hormuz remains one of the most critical chokepoints in the global energy market, with a significant share of the world’s oil passing through it daily. Any prolonged closure or instability in the region typically triggers sharp price reactions due to supply concerns.

Experts warn that the continued stalemate could have far-reaching economic consequences. Mohit Kumar, chief European economist at Jefferies, noted that the ongoing impasse and restricted access to the Strait are negative signals for the oil market.

“The longer the Strait is closed, the more it would have a negative impact on the global economy,” Kumar said in a note to investors.

The latest price surge comes amid an already fragile global economic environment, where inflationary pressures and energy costs remain key concerns for policymakers. Higher crude prices often translate to increased fuel costs, transportation expenses and broader inflation, particularly in import-dependent economies.