NEW YORK: Oil prices pared gains on Tuesday after briefly climbing above US$100 a barrel following an announcement from US President Donald Trump that he was extending a ceasefire with Iran until Tehran submits a proposal.
Brent crude futures were volatile, settling up about 3% on Tuesday and then climbing further to rise more than 5% to a session high of US$101.15 after reports that US Vice President JD Vance had called off his trip to Islamabad for peace talks with Iran.
Prices later retreated after Trump said the ceasefire would remain in place until Iranian leaders present what he called a unified proposal and talks are concluded, though he said the US naval blockade of Iran would continue.
Earlier, Iran said it had yet to decide whether to attend peace talks with the United States, and it had yet to comment on Trump's announcement.
Brent futures were up US$4.22, or 4.4%, at US$99.67 a barrel in post-settlement trading on Tuesday. US West Texas Intermediate crude settled up US$2.52, or 2.8%, at US$92.13.
Shipping traffic through the Strait of Hormuz, which normally handles about 20% of global oil and liquefied natural gas supplies, remained broadly halted on Tuesday with only three ships passing through the waterway in the past 24 hours, shipping data showed.
"You've already at this point lost a billion barrels, even if this resolves tomorrow. If it's another month, it's 1.5 billion barrels," Saad Rahim, chief economist at commodity trader Trafigura, said at the FT Global Commodities Summit.
Elsewhere in the Middle East, the Israeli military said Hezbollah fired rockets at Israeli troops in southern Lebanon, accusing the Iran-backed group of violating a ceasefire ahead of US-mediated talks between the Israeli and Lebanese governments this week. There was no immediate comment from Hezbollah.
As concerns about jet fuel supplies grow, the European Union's transport chief said the bloc would provide guidance to airlines on how to handle issues such as airport slots, passenger rights and public service obligations in the event of shortages because of the Iran war.
German Economy Minister Katherina Reiche said jet fuel supplies are not in danger as refineries adapt to increased demand, but added the government is monitoring the situation.
Ukrainian President Volodymyr Zelenskiy said the Druzhba oil pipeline pumping Russian oil to Europe is ready to resume operations, signaling Ukraine now expects a 90-billion-euro (US$106 billion) aid package to be unblocked.
Three industry sources, however, said Russia is set to stop oil exports from Kazakhstan to Germany via the Druzhba pipeline starting on May 1.
Russia's energy ministry did not immediately reply to a request for comment. Kremlin spokesman Dmitry Peskov said he was not aware of a move to stop the oil exports.
In Germany, the biggest economy in Europe, investor morale declined to its lowest level in more than three years in April as businesses started to feel the economic consequences of the Iran war far beyond price increases, the ZEW economic research institute said.
In the United States, retail sales increased more than expected in March as the war in Iran boosted gasoline prices and led to a record surge in receipts at service stations, while tax refunds underpinned spending elsewhere.
Those crude price increases came as the market waited for direction from the US Energy Information Administration on Wednesday.
US crude oil inventories fell after three straight weeks of gains, while gasoline and distillate stocks also declined, market sources said, citing American Petroleum Institute figures on Tuesday.
Crude stocks fell by 4.5 million barrels in the week ended April 17, the sources said on condition of anonymity.
Analysts projected that energy firms pulled 1.2 million barrels of crude from storage during the week ended April 17.
Gasoline inventories fell by 5.2 million barrels, while distillate inventories fell by 4.6 million barrels compared to a week earlier, the sources said. — Reuters
