Brent, WTI rise as Iran tensions escalate

Oil prices rose Tuesday as U.S. President Donald Trump said that the ceasefire with Iran was on life support after rejecting Tehran’s counterproposal to end the war, signaling the conflict in the Middle East could drag on.

International benchmark Brent crude futures for July gained 0.90% to $105.12 a barrel. U.S. West Texas Intermediate futures for June rose 1% to $99.05 per barrel.

Trump told reporters that the state of the ceasefire is “unbelievably weak,” calling Iran’s counterproposal to end the conflict “garbage.”

“I would say the ceasefire is on massive life support, where the doctor walks in and says, ‘Sir, your loved one has approximately a 1% chance of living,'” Trump said.

Since the U.S. and Israeli-led war against Iran started on Feb. 28, WTI and Brent are both up more than 40%. “Oil prices have been volatile and can rise further if US-Iran dealmaking remains thorny,” Citi said in a note.

Re-escalation in the Iran war is certainly possible, investment firm Dragonfly’s Chief Intelligence Officer Henry Wilkinson told CNBC’s “Squawk Box Asia” on Tuesday, adding that Trump may ask Chinese President Xi Jinping to press Iran to accept U.S. terms later this week during talks between China and the U.S.

The oil market will take until 2027 to normalize if the Strait of Hormuz stays blocked beyond mid-June, Saudi Aramco CEO Amin Nasser warned Monday.

“If the Strait of Hormuz opens today, it will still take months for the market to rebalance, and if its opening is delayed by a few more weeks, then normalization will last into 2027,” Nasser, who heads the world’s largest oil company, told investors on the company’s first-quarter earnings call.

— CNBC’s Kevin Breuninger  and Spencer Kimball contributed to this report.