WTI Oil advances above $101.00 amid persistently high Middle East tensions

• WTI Oil climbs back above $101.00 as prospects for a Middle East peace deal dim.
• The US is not serious about securing a peace agreement, Iran alleged.
• Reports indicate that a vessel is ablaze in the Strait of Hormuz.

Above $101.00 on Tuesday, US benchmark West Texas Intermediate (WTI) Oil is recovering part of its losses from previous days, though it still trades well below Friday’s $103.28 peak. The rebound comes as expectations of a Middle East peace agreement weaken and attacks persist on vessels seeking passage through the Strait of Hormuz.

According to the Iranian Foreign Ministry, negotiators from Saudi Arabia, Pakistan and Turkey reached Tehran on Monday for talks with the Iranian authorities aimed at preventing tensions from escalating further. 

The prospect of a near-term peace agreement nevertheless remains remote. Iranian authorities alleged that the US was not serious about reaching a deal, while the US and Israel intensified their threats against the Islamic Republic.

Reports from the United Kingdom Maritime Trade Operations (UKTMO) also indicated that a vessel was on fire in the Strait of Hormuz, around 63 nautical miles south-east of Iraq. Having carried about 20% of global crude production before the war, the passage has become a trap, heightening fears of supply disruption.

Supply concerns have been compounded by continued attacks on Saudi Arabian airports and oil infrastructure by Yemen’s Iran-backed Houthi militias. Following Monday’s attack on Riyadh airport, Saudi's Civil Defense reported additional drone attacks on Tuesday, after issuing emergency alerts in eastern provinces earlier on Tuesday.