Oil prices rose on Tuesday, August 18, 2026, as hopes for a peace deal between the United States and Iran became weaker. The fresh tension raised fears about oil supply from the Middle East, especially through the key Strait of Hormuz.
Brent crude futures rose 62 cents, or 0.7%, to $91.49 a barrel by 0408 GMT. US West Texas Intermediate, also known as WTI, rose 75 cents to $85.25 a barrel. WTI had earlier touched $85.37, its highest level since July 31. Brent had also reached its highest level since July 30 after a rise on Monday.
The oil market has become very sensitive to news from the United States, Iran and the Strait of Hormuz. Traders are now focused on whether the conflict will last longer and whether oil tankers can safely pass through the waterway.
Peace Talks Lose Momentum
The main reason for the latest rise in crude prices is the loss of hope for a quick peace deal.
Iran has said it will take a “fully offensive” military stance after efforts for a permanent end to the conflict stalled. The United States has also ruled out an extension of the current temporary ceasefire.
The two sides had hoped to find a path toward a longer peace arrangement. Those efforts have not produced the progress that the oil market had hoped for. As a result, traders now face greater uncertainty about the future of the conflict.
The war began after US and Israeli attacks on Iran on February 28. Since then, the conflict has created major concerns about energy supplies from the region. The latest setback in diplomacy has brought those concerns back to the centre of the oil market.
Strait of Hormuz Becomes The Main Focus
The Strait of Hormuz is at the centre of the current oil supply concern. It is a vital route for crude oil trade between the Persian Gulf and global markets.
Before the current crisis, a large number of oil tankers passed through the strait. Now, tanker traffic remains very low. Reuters reported that crossings have stayed in the single digits despite a small rise from weekend levels.
This matters because a prolonged disruption could reduce the amount of oil that reaches buyers around the world. Even if oil production continues, problems with transport can create a shortage in the market.
Tim Waterer, chief market analyst at KCM, said a deal to reopen the Strait of Hormuz does not appear close. He also noted that shipping numbers remain very low.
For oil traders, this means the physical supply situation is just as important as the political talks. If tanker traffic remains weak, the market may keep a higher risk premium in crude prices.
Fresh Attack Adds To Supply Concerns
The latest security developments have added more pressure to the oil market.
A projectile struck a vessel that was passing out of the Strait of Hormuz on Tuesday. The incident was the latest in a series of attacks that have kept ship traffic at very low levels.
There was also a missile attack by Yemen’s Houthis on vessels in the Red Sea. The group’s military spokesperson, Yahya Saree, said the attack targeted what they described as a Saudi military ship and four escort vessels.
These events have made shipping companies more cautious. When vessels face a higher risk, owners may delay journeys or choose other routes. Such decisions can increase travel time and transport costs.
The effect can then spread across the wider energy market. A longer disruption does not only affect crude oil. It can also affect fuel supplies, shipping costs and prices for consumers.
Why $90 Oil Matters
Brent crude has now moved above the important $90 per barrel level. This is a key price area for the global energy market.
When crude stays above $90 for a long period, it can create wider economic pressure. Oil is a basic input for transport, manufacturing and many other parts of the economy. Higher crude prices can therefore push up the cost of petrol, diesel, air travel and other products.
Higher oil prices can also create inflation pressure. This becomes important for central banks because they must decide whether price growth is under control.
The oil market therefore has a direct link with interest rates. If crude stays high and adds to inflation, central banks may have less freedom to cut rates. That could affect currencies, bonds, stocks and commodities.
This is one reason investors outside the oil market are also watching the latest moves in crude.
Analysts Expect More Volatility
The latest rise does not mean oil must continue higher every day. The market remains very sensitive to political news, so prices can change quickly if the situation improves.
DBS Bank’s head of energy research, Suvro Sarkar, said the lack of a deal could affect oil price expectations for the fourth quarter and even 2027.
He expects oil prices to stay within a broad $80 to $100 per barrel range in the near term while uncertainty about a deal remains.
That forecast shows how wide the possible price path could be. A quick diplomatic breakthrough could reduce the supply risk premium and push prices lower. A major escalation could have the opposite effect and send crude toward the upper end of that range.
Iran And Oman Discuss Strait Operations
There is still some diplomatic activity around the Strait of Hormuz.
Iran has held talks with Oman about an agreement for the management of the waterway. Iran has said the two sides are close to a deal.
Oman has an important role in the region because it has long served as a channel for diplomacy between different countries. Any agreement that helps restore safe tanker traffic could reduce some of the pressure on oil prices.
However, the situation remains uncertain. Former President Donald Trump has threatened military action against Oman in response to its talks with Iran. This has added another layer of tension to the diplomatic process.
For oil traders, the key question is simple: can safe tanker traffic return to normal? Until there is a clear answer, the supply risk will remain part of the crude price.
US Oil Stocks May Offer Some Support
Supply concerns are not limited to the Middle East.
A preliminary Reuters poll showed that US crude oil stocks were expected to have fallen last week. Product inventories were also expected to decline.
A fall in US stockpiles can support crude prices because it may signal tighter supply in the domestic market. If demand remains firm while inventories fall, traders may expect a tighter balance in the weeks ahead.
However, inventory data can also change the market view. A larger-than-expected stock build could weaken crude prices, while a sharp draw could provide more support.
That makes the next US inventory report another important factor for oil traders.
What Higher Oil Means For The Global Economy
The latest oil move matters far beyond energy markets.
Higher crude prices can raise fuel costs for households and companies. Airlines, transport firms, factories and other businesses may face higher expenses if oil remains expensive.
Consumers can also feel the effect through petrol and diesel prices. Higher fuel costs can reduce household spending because people have less money for other goods and services.
There can also be a second effect through inflation. If energy costs remain high, companies may pass part of their higher expenses to customers. That can make it harder for central banks to bring inflation down.
This creates a difficult situation for policymakers. Weak economic growth may call for lower interest rates, but higher energy costs may argue for caution.
What Could Happen Next
The next major move in oil will depend on the direction of US-Iran relations.
If the two sides return to serious peace talks and reach an agreement, fears about supply could ease. More tanker traffic through the Strait of Hormuz would also reduce the risk premium in crude prices.
On the other hand, a wider conflict or more attacks on ships could push oil prices higher. A longer disruption in the strait would create even greater concern because the waterway is so important to global energy trade.
For now, the market has few clear answers. Brent crude stands at $91.49, while WTI sits at $85.25. Both benchmarks have moved higher as the chance of a quick peace deal has faded.
Oil Market Faces A Critical Period
The August 18 move shows how closely oil prices remain tied to events in the Middle East. Brent rose $0.62, or 0.7%, to $91.49, while WTI gained $0.75 to $85.25. WTI had reached $85.37 earlier in the session.
The main concern is no longer only the conflict itself. The bigger issue for oil is whether the conflict can disrupt supply for a long period.
The Strait of Hormuz remains the key pressure point. Tanker traffic is still very low, peace talks have lost momentum and fresh attacks have added to supply fears.
At the same time, US oil stocks may have fallen, which could provide another source of support for crude prices.
For now, the market has entered a period of high uncertainty. Analysts expect prices to remain volatile, with DBS Bank’s Suvro Sarkar placing the near-term range at $80 to $100 per barrel.
The direction from here will depend on diplomacy, shipping safety, US inventories and the wider military situation. Until the Strait of Hormuz sees a clear return to safe and regular tanker traffic, oil is likely to carry a higher risk premium.
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