Oil near $108 as Mideast war risk outweighs relief

U.S. crude traded around $107.80 per barrel on Tuesday after traders largely dismissed a reported temporary waiver on Iranian oil sanctions and shifted attention to the risk of broader conflict in the Middle East.

West Texas Intermediate slipped about 1% after President Donald Trump postponed a planned strike on Iran and the U.S. extended waivers tied to Russian crude shipments. Volatility remained elevated as market participants weighed the prospect of renewed fighting.

Treasury Secretary Scott Bessent issued a 30-day general license for Russian oil cargoes intended to give energy-dependent countries temporary access to barrels stranded at sea. Bessent wrote that the extension would provide additional flexibility, allow work on specific licenses as needed, and help reroute existing supply by reducing China’s ability to stockpile discounted oil.

A report that U.S. negotiators had proposed a temporary lift of Iranian oil sanctions briefly pushed prices below $105 before the decline was reversed. The quick rebound highlighted the market’s sensitivity to conflicting headlines.

Former hedge fund manager and market commentator Jim Cramer wrote: “Here’s the big problem with oil: these days it goes down less when there is a hint of peace and it goes up much more when there is a rumor of war. So if there is no peace this time oil could challenge its $119 high. All of this truce-carrot with no stick breeds higher and higher prices.”

Analysts say sustained higher oil would lift inflation expectations and tighten financial conditions, which could delay Federal Reserve rate cuts and weigh on risk assets, including cryptocurrencies. Disruptions to tanker traffic near the Strait of Hormuz have been a notable supply-side concern this year.

Near-term factors traders are watching include progress in U.S.-Iran negotiations, any new sanctions actions, and military incidents affecting Middle East shipping lanes. Market participants expect price swings to remain pronounced while uncertainty around those issues persists.