Oil prices rose more than 3% on Tuesday as stalled efforts to end the Iran war kept the Strait of Hormuz largely closed.
This comes as the United Arab Emirates (UAE) announced that it would leave OPEC and OPEC+.
Brent crude futures for June climbed $3.37, or 3.1%, to $111.60 a barrel by 1336 GMT, after gaining 2.8% to close the previous session at their highest since April 7.
The contract is up for a seventh straight day.
United States President Donald Trump, meanwhile, was said to be unhappy with the latest Iranian proposal to end the war.
Trump’s displeasure with the offer leaves the conflict deadlocked, with Iran shutting shipping flows through the Strait, a conduit for about 20% of global oil and gas supplies, and the U.S. retaining its blockade of Iranian ports.
Rystad Energy analyst Jorge Leon said: “Oil above $110 per barrel reflects a market that is rapidly repricing geopolitical risk.
“With peace talks stalled and no clear path to reopening the Strait of Hormuz, traders are factoring in a prolonged disruption to a critical artery of global supply.
UAE exits OPEC, OPEC+ in major shift for global oil market
“Even in a best-case scenario, any U.S.–Iran agreement is likely to be narrow and partial, leaving the Strait issue unresolved, which means the upside risks to prices remain.”
An earlier round of negotiations between the United States and Iran collapsed last week after face-to-face talks failed.
Ship-tracking data showed significant disruptions in the region, with six Iranian oil tankers forced to turn back due to the U.S. blockade, but some traffic is still moving.
Prior to the U.S.-Israeli war on Iran, which began on February 28, between 125 and 140 vessels transited the strait daily.
The loss of about 10 million barrels per day of crude and products through the Strait will continue to exceed falling consumption as inflationary pressures and demand destruction loom, PVM analyst Tamas Varga told Reuters, leading to an ever-tighter oil market balance.
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