Meanwhile, the EIA says the war has had a greater supply impact than initially thought: File Image/Pixabay.

With hopes of a resolution to the U.S./Iran war all but evaporated and U.S. president Donald Trump’s remark that the ceasefire between the two countries was “on massive life support” continuing to resonate, traders drove crude prices up on Tuesday, this time by a vigorous 4 percent.

Brent settled up 3.4 percent at $107.77 per barrel, and West Texas Intermediate settled up 4.1 percent at $102.18 per barrel.

Another bearish driver influencing oil trading was U.S. consumer prices: the U.S. Labor Department on Tuesday reported that the Consumer Price Index rose 3.8 percent in April from a year earlier, the fastest rate since May 2023 and up from a 2.4 percent annual increase before the war started in February.

While the increase was driven largely by energy prices (up 3.8 percent since the previous month and nearly 18 percent from a year earlier), the core index (minus food and energy prices) also rose 2.8 percent over the year in April.

Michael Reid, chief U.S. economist at RBC Capital Markets, said “Generally inflation is moving in the wrong direction.”

The U.S. Energy Information Administration on Tuesday also had bad news to share, in the form of revising its earlier forecasts to reflect a much more substantial impact on global oil supplies than initially calculated.

The agency estimated  that 10.5 million barrels of oil output was shut in across the Middle East in April and will rise to a peak of 10.8 million barrels per day (bpd) this month as Middle Eastern storage tanks hit maximum capacity; the EIA earlier forecast that production losses would peak at 9.1 million bpd.

As for earlier hopes that Trump’s visit to China to meet with president Xi Jinping may result in some pressure being put on Iran to compromise more on its peace proposals to Washington, they too seemed to fall by the wayside; in their place was a remark by Amos Hochstein, who served as a senior energy advisor to former U.S. president Joe Biden, and who told media that the oil market is heading toward a cliff if both countries don’t strike a deal by June.

He said, “When you fall off the cliff in oil and energy, it’s very hard to get back up, and then it’s not about normalizing, then it takes a really long time.”

For his part, Admiral James Stavridis, former NATO Supreme Allied Commander, told media that Trump has three options regarding Iran: walk away from the conflict; resume a massive bombing campaign; or, most likely, try to open the Strait of Hormuz using force, which he predicted would require troops on the grounds and cost $1 billion per day.