Oil prices are heading up again, and the reason is the same one that has been driving markets for months: the US-Iran standoff shows no sign of resolution. West Texas Intermediate, the US benchmark, rose for a fourth straight session, pushing past $85 a barrel. That follows a 4.5% gain over the previous three days.
Brent crude, the global benchmark, settled above $91 a barrel. President Donald Trump said Tuesday that the US was not holding talks with Tehran. The conflict, which began in late February, has now lasted nearly six months.
The Strait of Hormuz, a narrow waterway that carries a huge share of the world's oil, remains under strain. Little traffic is flowing through it, with the US and Iran at odds over how to manage the waterway. That uncertainty keeps a floor under prices.
The waterway normally handles a large share of global crude shipments, which is why traders are watching it so closely.
The Russia-Ukraine war has also tightened supplies, especially after attacks on refineries. Diesel and other refined products have risen even more sharply than crude, which is bad news for anyone who drives a truck or runs a business. Former national security adviser Jake Sullivan said the US might have to "bite the bullet and do a bad deal" to end the standoff.
Trump said the US is planning new economic pressure on Iran, and Treasury Secretary Scott Bessent indicated that tough new steps could be announced this week. Across the Persian Gulf from Iran, the United Arab Emirates said it was halting all trade and financial dealings with Tehran, citing what it called regional escalations.
The prolonged standoff has also disrupted global shipping. With the Strait of Hormuz effectively closed to most tankers, vessels are taking much longer alternate routes, adding days to transit times and pushing up insurance premiums for ships in the region. That raises the total cost of delivering oil to market.
Meanwhile, there are no signs of a diplomatic breakthrough. President Trump reiterated that no negotiations are taking place, and the UAE has halted all dealings with Iran due to regional escalation. Traders remain on edge, and any new development - whether diplomatic or military - could trigger another sharp price move.
US crude stockpiles, including at the Cushing, Oklahoma, hub, posted a modest draw, according to the American Petroleum Institute. Distillate inventories, which include diesel, were also seen falling. The government's official inventory report is due Wednesday, but the trend is clear.
Diesel markets are under particular strain because Middle East supply routes have been disrupted and Moscow has halted exports. In the US, the profit from refining crude into diesel has surged past $100 a barrel, an all-time high. That cost inevitably shows up in higher prices for freight, groceries, and heating bills.
The prolonged standoff has cascaded through global supply chains, pushing up the cost of moving oil to market.
The bottom line: as long as the US-Iran conflict grinds on, energy prices are likely to stay elevated. For drivers and businesses, that means higher costs at the pump and on store shelves, and the longer the standoff lasts, the more these increases will spread throughout the economy.