Oil climbs as market monitors US-Iran talks

Oil prices saw a modest rise Tuesday as market participants nervously watched the U.S.-Iran peace talks, where a lack of significant progress provided underlying support. Brent crude futures climbed 1.42 percent to $73.01 a barrel, while U.S. West Texas Intermediate crude rose 1.36 percent to $69.48 a barrel.

Analysts noted that the ongoing uncertainty surrounding the negotiations is preventing a sharp focus on an already oversupplied market. Ole Hansen, an analyst at Saxo Bank, commented that "the deal is by no means signed yet, so something can still go wrong and any comments from either side could raise concern which is helping to underpin prices." He added that any further escalation could push prices towards $75 and then $80.

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The deal is by no means signed yet, so something can still go wrong and any comments from either side could raise concern which is helping to underpin prices and it's basically removing some of the recent intense focus on an increasingly oversupplied market.

Adding to the tension, Iran's foreign minister declared on Tuesday that peace talks with Washington would not occur if U.S. threats persisted. This statement followed remarks from U.S. President Donald Trump about intending to "finish the job" unless a deal was reached.

Meanwhile, oil flows through the Strait of Hormuz, a critical chokepoint for global energy supply, are recovering more slowly than anticipated. Shipping data indicates that vessel crossings remain in single digits, with no sustained recovery evident. In response, Saudi Arabia is reportedly considering expanding the capacity of its crude oil pipeline to the western Red Sea coast. This move would allow the kingdom and its neighbors to transport more oil without needing to transit the Strait of Hormuz.

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So if there's any further escalation, then $75 would be the natural level to look at next ahead of $80.