Oil prices jumped about one per cent to a one-week high in volatile trade on Tuesday as the market waited for news on the Iran war, with Tehran reviewing a proposed agreement with the US to halt the conflict.
Brent futures were up $1.09, or 1.2 per cent, to $96.07 a barrel at 13:38 EDT (17:38 GMT), while US West Texas Intermediate (WTI) crude rose $1.50, or 1.6 per cent, to $93.66.
During the session, both contracts were down more than $2 a barrel and up more than $1. Both crude benchmarks are on track for their highest closes since May 26.
Iran is reviewing a proposed agreement with the US to halt the war but has not communicated with Washington for a few days, Iranian media reported on Tuesday, after US President Donald Trump said negotiations were ongoing.
More than three months after the US and Israel launched strikes against Iran, the conflict has evolved into a stalemate that has largely shut the Strait of Hormuz, a pivotal waterway for the global oil market.
Iran has effectively halted most non-Iranian shipping in and out of the Persian Gulf since the war began, choking off about a fifth of global oil and liquefied natural gas flows and driving prices up by 50 per cent or more. The US has also maintained a blockade on Iranian ports.
"The (oil) complex continues to gyrate wildly amid conflicting comments out of the White House and Iran as well as between Trump and (Israeli Prime Minister Benjamin) Netanyahu," analysts at energy advisory firm Ritterbusch and Associates said in a note.
"There are still various moving parts to this drama, but at the end of the day a significant reopening of the Strait of Hormuz doesn't appear much closer than was the case a couple of months ago," Ritterbusch said.
Trump said on Monday that negotiations were continuing and there would be a deal over the next week to extend a ceasefire agreed to in April and reopen the strait.
US Secretary of State Marco Rubio told lawmakers on Tuesday that Iran has agreed to negotiate aspects of its nuclear programme that it previously refused to discuss, but said that was not a guarantee that negotiations would lead to a deal.
Iran's semi-official Fars agency, citing a source, said that messages on the possible deal, or memorandum of understanding, had stopped a few days ago, with the last one being Tehran's "clear message" over Lebanon. Iran is seeking a stop to Israel's incursion against its ally Hezbollah.
Israel kept up strikes on southern Lebanon on Tuesday, pressing its campaign against Hezbollah a day after Trump asked Netanyahu not to attack Beirut to avert further escalation in the three-month war.
There is a possibility that global oil inventories will hit critical or historically low levels just ahead of the peak summer demand period if stock draws continue at their current pace, the head of the International Energy Agency's oil industry and markets division said on Tuesday.
Oil traders in the US were waiting for weekly storage reports from the American Petroleum Institute (API) trade group later on Tuesday and the US Energy Information Administration (EIA) on Wednesday.
Analysts estimated that energy firms pulled four million barrels of crude from storage during the week ended May 29. If correct, that would be the first time energy firms pulled crude out of storage for six weeks in a row since January 2025.
There was a decrease of 4.3 million barrels in the same week last year and an average decline of 2.7 million barrels over the past five years (2021 to 2025).
(Reporting by Scott DiSavino in New York, Stephanie Kelly in London, Pooja Menon in Bengaluru and Siyi Liu in Singapore; Editing by Keith Weir, Andrea Ricci and Paul Simao)