Oil prices climb to wartime highs, Brent crude breaks above 110 dollars

Brent crude oil broke through the $110 level on Tuesday, setting a new three-week high, as the uncertain prospects of US-Iran talks have become the core driving force behind rising oil prices. With the blockage of the Strait of Hormuz continuing, the supply gap in the global energy market is expanding at a record pace, inflationary pressures are spreading to the bond market, and the deep impact on the petrochemical industry chain may have only just begun to emerge.

On Tuesday, Brent crude hit a session high of $112.70 a barrel, a 4.1% increase, marking the first time in three weeks the price has breached the $110 threshold—before that, Brent was last traded above $110 on April 7 before Trump announced a temporary ceasefire. At the close, Brent reported at $111.26, up 2.8%, while the US benchmark West Texas Intermediate (WTI) settled at $99.93, up 3.7%.

The core driving force behind the upward oil prices is the stalled progress in US-Iran negotiations. The White House stated on Monday that US officials are reviewing Iran's latest proposal, but emphasized Trump's unchanged "red line" stance on any agreement. Secretary of State Rubio said, emphasizing that the nuclear issue "remains a central topic". Jim Reid, head of macro research at Deutsche Bank, pointed out that "the market has been clinging to any signs of negotiations, and the absence of these signs is intensifying concerns about the collapse of negotiations."

Sustained high oil prices are reigniting market vigilance against inflation. On Tuesday, the yield on the UK's 10-year Treasury bonds rose to 5%, touching that level for the first time since the end of March; the 30-year UK bond yield rose to about 5.7%, approaching the highest level of this century. The US 10-year Treasury bond yield rose by 2 basis points to 4.36%, and the same maturity in German bonds also rose by 2 basis points to 3.06%.

Stalemate in Talks, Oil Prices Lose Downward Support

The situation in the Strait of Hormuz is the fundamental reason behind the surge in oil prices. Since the outbreak of the conflict, Iran has almost brought oil transport through the Strait to a standstill and launched attacks on energy facilities in the Gulf region, causing Brent crude to rise from less than $60 a barrel at the beginning of the year to a high of $119.

On April 7, after Trump announced a temporary ceasefire, oil prices plummeted, dropping to a low of $86.09 a barrel. However, as talks progress slowly, market sentiment reversed again.

White House Press Secretary Levitte confirmed at a press conference on the 27th that President Trump and his national security team discussed Iran's new proposal for negotiations that day.

According to reports, Levitte said on Monday that Trump had called together national security officials to review Iran's latest proposal and said Trump will "soon" make a statement on it. Rubio, meanwhile, said that nuclear issues "are the root reason we are involved in all this, and it remains the core topic," refusing to speculate on whether Trump would accept Iran's proposal to open the Strait while delaying nuclear talks.

On Tuesday, news that the UAE announced its withdrawal from OPEC briefly narrowed the increase in oil prices, but ultimately failed to change the overall upward trend.

At the same time, Brent crude's return to above $100 for nearly a week has accelerating market inflation concerns towards the bond market. Reid from Deutsche Bank said, "Given that Brent has been above $100 for nearly a week, broader inflation concerns are clearly back on the agenda