TLDR
- Oil prices have risen around 10% over the past week as Strait of Hormuz deal hopes fade
- Both the US and Iran are now demanding war compensation from each other, stalling talks
- Brent crude reached $87.93 and WTI hit $82.42 a barrel on Tuesday
- Houthi forces struck Saudi Aramco’s Jazan refinery, adding to supply fears
- Rising oil prices are reviving inflation concerns and increasing bets on a US interest rate hike
Oil has climbed sharply this week as negotiations between the United States and Iran over the Strait of Hormuz appear to be going backwards rather than forwards.
Brent crude futures rose to $87.93 a barrel on Tuesday, while West Texas Intermediate climbed to $82.42. Both contracts had settled up more than 5% on Monday alone.
US and Iran Trade Compensation Demands
The latest roadblock came when President Donald Trump said Monday he would seek conflict compensation from Iran as part of any peace deal. This was a direct response to Tehran’s own demand that the US pay war reparations before any agreement could be reached.
BREAKING: President Trump says the U.S. is now demanding compensation from Iran. pic.twitter.com/EjSvAGJHXs
— The Kobeissi Letter (@KobeissiLetter) August 10, 2026
Iran has also said it is in talks with Oman to set new shipping routes through the strait, but insists that all US sanctions must be lifted first.
The two sides are also giving conflicting accounts of the waterway’s status. Washington says Hormuz remains open, while Tehran claims it has shut the channel using mines and drones.
The strait handled roughly a fifth of the world’s oil supplies before the US-Israel conflict with Iran began. It briefly reopened following a peace deal in June, but traffic has since dried up after renewed Iranian attacks on vessels in the region.
Houthi Attack on Saudi Aramco Adds Pressure
Supply concerns deepened over the weekend when Yemen’s Houthi forces said they struck Saudi Aramco’s Jazan refinery. The Houthis, who are backed by Iran, declared a naval blockade against Saudi Arabia in the Red Sea last month and have threatened to attack ships and oil infrastructure.
Strategist Stephen Innes at Quintex Intel described the situation as “quite the game of chicken,” saying both sides are trying to use oil as a weapon without firing further military shots.
Jason Wong at BNZ said: “In the absence of any positive headlines on negotiations to reopen the strait, pressure on oil prices has been upward.”
Inflation and Rate Hike Fears Return
The oil price rally is bringing inflation back into focus. The US economy shed more than 20,000 jobs last month, which had briefly lowered expectations for a Federal Reserve rate hike. But rising energy costs could change that.
Cleveland Fed President Beth Hammack said Monday that a single 25-basis-point rate move “probably doesn’t do a whole lot,” hinting that multiple hikes could be needed depending on how conditions develop.
Traders are now watching Wednesday’s US consumer price index report closely. That data could give the Fed clearer direction on its next move.
Asian equity markets were mixed on Tuesday. Seoul, Sydney, and Singapore posted gains, while Hong Kong, Shanghai, and Mumbai fell.
Stop guessing and start investing with confidence. KnockoutStocks gives you the AI insights, market intelligence, and stock research you need to spot opportunities, cut through the noise, and make smarter investment decisions — all in one powerful platform.
Sign up today and get 50% OFF full access to our premium stock picks.
Simply use coupon code SPECIAL50 at checkout to claim your exclusive discount.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
