Oil prices moved higher on Tuesday as uncertainty over the Strait of Hormuz continued to dominate energy markets, with Iran signalling that the key shipping route will remain restricted unless Washington meets Tehran’s demands.

West Texas Intermediate crude settled 1.3% higher at $83.20 per barrel, while Brent crude gained 1.36% to $88.91. Oil prices have now risen more than 6% this week as expectations for an imminent agreement to restore shipping activity through the strait have weakened.

Iranian official Mohsen Rezaei said reopening Hormuz would depend on the U.S. meeting certain conditions, including releasing Iranian funds currently frozen overseas. His comments added fresh uncertainty after earlier optimism that Washington and Tehran could be moving closer to an agreement.

However, diplomatic signals remain mixed. Pakistan’s Defense Minister Khawaja Asif suggested that prospects for a peace arrangement were improving. Pakistan previously helped mediate the temporary U.S.-Iran agreement reached in June, which later collapsed as tensions returned to the region.

President Donald Trump has meanwhile increased pressure on Tehran, calling for Iran to pay reparations to the U.S. Treasury Secretary Scott Bessent had indicated last week that an agreement over Hormuz could be reached soon, but no deal has yet been announced.

Shipping activity through the strait also remains significantly below normal levels. Kpler data showed only eight vessels crossed Hormuz on Monday, compared with more than 130 before the U.S. and Israeli attacks on February 28.

Despite the limited vessel traffic, U.S. Energy Secretary Chris Wright said oil exports through Hormuz had reached a seven-day average of around 9 million barrels per day. Including pipeline shipments, total Gulf oil flows were running at approximately 15 million barrels per day.

The Trump administration has also extended its suspension of parts of the Jones Act, allowing greater flexibility for vessels transporting certain energy products between U.S. ports.

At the same time, U.S. emergency oil reserves continue to decline. Strategic Petroleum Reserve inventories have fallen below 300 million barrels, their lowest level in more than four decades, after Trump authorised the release of 172 million barrels in March to help offset supply disruptions caused by the Iran conflict.

With shipping through Hormuz still constrained and negotiations producing conflicting signals, developments between Washington and Tehran are likely to remain a major driver of oil prices.

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