Oil prices rise as Strait of Hormuz reopening hopes fade

Oil prices climbed again on Tuesday as uncertainty over the reopening of the Strait of Hormuz raised concerns about global inflation and increased expectations of another US interest rate hike this year.

Crude prices have gained about 10% over the past week as the United States and Iran remain far apart over the key shipping route.

The latest tension came after US President Donald Trump said Washington would seek compensation from Iran for the conflict as part of any peace deal. 

Tehran, meanwhile, has demanded war reparations from the United States before agreeing to a settlement.

Trump‍‍`s remarks came a day after he said the US was taking a less aggressive approach to the situation and would allow economic pressure on Iran to build rather than launch further military action.

The exchange between the two sides has raised doubts about a quick agreement to reopen the Strait of Hormuz, through which a large share of the world‍‍`s oil supply normally passes.

Both major oil contracts jumped about 5% on Monday and extended their gains on Tuesday.

"Without any positive news on negotiations to reopen the strait, oil prices are likely to remain under pressure," said Jason Wong of BNZ.

Stephen Innes, global strategist at Quintex Intel, said both Washington and Tehran were using oil supplies as leverage without directly increasing military action.

Higher oil prices have also brought inflation concerns back into focus. 

Although recent weak US jobs data had reduced expectations of a Federal Reserve rate hike, a sustained rise in energy prices could put fresh pressure on the central bank.

Cleveland Federal Reserve President Beth Hammack said Monday that a single 25-basis-point rate move would have only a limited effect on the economy, suggesting more than one adjustment could eventually be needed.

Investors are now waiting for US consumer price data due Wednesday, which could provide fresh clues about the Federal Reserve‍‍`s next interest rate decision.

Asian stock markets were mixed on Tuesday after Wall Street ended slightly lower. 

Hong Kong, Sydney, Singapore and Seoul posted gains, while Shanghai, Wellington, Taipei and Manila fell. 

Tokyo‍‍`s market was closed for a holiday.

Around 0215 GMT, West Texas Intermediate crude was up 0.3% at $82.40 a barrel, while Brent crude gained 0.3% to $87.97.