Oil Races Back Toward $100 as US Strikes Iran Missile Sites Hours After Trump Declares Peace Deal 'Largely Done'

Oil prices rose Tuesday as investors balanced hopes for a possible US-Iran peace deal against fresh American strikes in the Middle East that raised doubts about how close an agreement really is.

Brent crude climbed 2.5% to $98.57 a barrel, moving back toward the $100 mark after falling below it Monday for the first time in two weeks.

US and Iranian negotiators are in Doha for talks on ending the three-month war, after President Donald Trump said over the weekend that a peace deal with Iran had been “largely negotiated.”

But market optimism was checked after US forces struck missile sites in southern Iran and boats allegedly attempting to lay mines. The attacks were described by Washington as defensive and not a formal end to the ceasefire, but they underlined how fragile the diplomatic track remains.

Jim Reid of Deutsche Bank said the strikes appeared to be “a warning shot that the ceasefire is fragile.”

“Optimism is still elevated that an agreement can be made to end the war,” Reid said, while noting that the move toward peace has repeatedly looked like “three steps forward and one or two back.”

Bond markets showed signs of continued hope for a deal. US Treasury yields fell as bond prices rose, with investors looking for a possible reopening of the Strait of Hormuz and relief from the inflationary pressure caused by disrupted energy flows.

Wall Street, closed Monday for a holiday, was also set to open higher.

Still, analysts warned that markets are becoming more sensitive to bad news. Daniela Hathorn, senior market analyst at Capital.com, said investors remain optimistic, but tolerance for negative headlines is shrinking.

If talks stall or disruption in the Strait of Hormuz worsens, she said, the reaction across oil, bonds and equities could become much sharper.