Oil prices climb as US-Iran deal hopes waver; stocks edge up

Oil prices climbed for a second session on Tuesday, driven by growing scepticism over the pace of US-Iran negotiations and the unresolved status of the Strait of Hormuz. Brent crude traded above $89 a barrel, while West Texas Intermediate held near its highest level in a week. Global stock markets also advanced, tracking the cautious optimism in energy markets.

Market doubts over Iran talks

Traders are questioning whether the US and Iran can bridge their differences quickly enough to resume normal oil flows through the strategic waterway. The Strait of Hormuz, through which roughly a fifth of global oil consumption passes, remains a flashpoint. Reports suggest talks have hit procedural hurdles, with Tehran and Washington signalling different expectations on timing and scope.

"The market is pricing in a prolonged closure," one commodities analyst said, pointing to the lack of concrete breakthroughs. The uncertainty has kept a floor under prices, even as other producers signal readiness to boost supply.

Stocks ride the oil wave

Equity indices across Asia, Europe, and the US opened higher, with energy shares leading gains. Investors are betting that sustained elevated oil prices will boost drilling and refining profits, even as they weigh the inflationary impact on consumer spending. The correlation between oil and stocks has strengthened this month, a sign that markets view the Hormuz issue as the dominant macro driver.

In Mumbai, the Sensex and Nifty edged up, mirroring global sentiment. Traders said the rebound in crude prices lifted oil marketing companies and exploration firms, though broader gains were capped by concerns over fuel inflation.

Reopening remains in limbo

The core question remains: when — or if — the Strait of Hormuz will fully reopen. Shipping data suggests some vessels are diverting, while insurers have raised war-risk premiums for tankers in the region. The US Navy has increased patrols, but no timeline for a full resumption has been announced.

Diplomatic sources familiar with the talks describe them as "fragile," with both sides trading proposals on sanctions relief and nuclear enrichment limits. The lack of visible progress has led some analysts to trim their forecasts for a near-term deal, pushing price expectations higher.

What to watch

For now, markets remain hostage to headlines from Vienna or Washington. Any confirmation of a breakthrough could send prices sharply lower, while a breakdown in talks might lift Brent above $90. Traders should also monitor US inventory data due later this week for signs of demand softening. The next few sessions will likely set the tone for the second half of August.