Oil Market Volatility Amid Hormuz Fee Talks and Geopolitical Tensions

Oil traders remained cautious as discussions about potential transit fees through the Strait of Hormuz introduced fresh uncertainty into the market. Brent crude, the most sensitive benchmark to Middle East disruptions, surged 2.5% to $98.47 per barrel following threats of retaliation from Iran's IRGC against U.S. airstrikes. The rally extended to a 4.1% gain, pushing prices above $100.11 at one point.

West Texas Intermediate crude showed divergent movement, settling at $93.91—a 2.8% decline from Friday's close but recovering from Monday's steep drop. The earlier sell-off reflected market optimism about a potential peace deal between the U.S. and Iran. Tehran's proposal for permanent shipping fees through the critical chokepoint, framed as environmental charges, would grant Iran and Oman joint control over the strategic waterway.

Geopolitical tensions escalated further with the U.S. Central Command reporting defensive strikes against Iranian targets. Contradictory signals emerged as former President Trump suggested a peace agreement might be imminent after three months of conflict. This created what one energy analyst described as 'blinking screens'—traders simultaneously processing war risks and peace prospects without clear directional conviction.