OIL prices climbed for a third consecutive session on Tuesday, with Brent crude rising above US$91 a barrel, as the breakdown of efforts to extend a US-Iran peace agreement heightened concerns over oil supplies through the strategically vital Strait of Hormuz.
Brent crude rose above US$91 a barrel, while US West Texas Intermediate crude moved towards US$85, after US President Donald Trump said he was not interested in extending an interim peace agreement with Iran.
The memorandum of understanding signed in June, which gave both sides 60 days to negotiate a longer-term peace agreement, officially expired on Monday.
The collapse of the interim arrangement has increased uncertainty over the future of oil shipments through the Strait of Hormuz, through which a significant share of global oil and liquefied natural gas cargoes normally pass.
Iran and Oman are continuing to negotiate arrangements for managing shipping through the strait, although the United States is not involved in the talks.
Washington is unlikely to support any agreement that does not guarantee unrestricted passage through the strategically vital waterway, while Middle Eastern oil producers appear to be increasingly adept at moving crude covertly through Hormuz to international buyers and supplying cargoes from outside the key chokepoint.
The oil rally came as the US dollar weakened, with traders reassessing the outlook for Federal Reserve monetary policy following a series of softer economic indicators.
Meanwhile, the US dollar index, which measures the greenback against a basket of major currencies, fell to around 99.5 on Monday, marking its third consecutive decline, before recovering some losses to trade around 99.60.
Recent data showed that US retail sales fell in July for the first time in nine months, while unexpected job losses and subdued inflation readings added to concerns over the strength of the US economy.
“Traders are selling off the dollar as they worry about U.S. economic growth and the Federal Reserve's interest rate response after recent underwhelming data,” said Kit Juckes, chief FX strategist at Societe Generale.
The euro climbed to a two-month high and was last up 0.08 per cent at around US$1.1578.
“We had a series of softer numbers in the U.S., with payrolls and retail sales coming out soft. That's going to reprice expectations to some degree about how much the Fed is going to tighten policy. The knee-jerk reaction of that is what is partly sending the dollar down,” Reuters cited Juckes saying.
According to the CME FedWatch tool, traders now see a 30.6 per cent probability of a Federal Reserve rate increase at its September meeting, down from 52.2 per cent a week earlier.
Markets are also looking ahead to the Federal Reserve’s Jackson Hole symposium, where investors will seek clues on policymakers’ assessment of recent economic data and the future direction of interest rates.
“The CFTC (Commodity Futures Trading Commission) data showed a big, big, big net dollar long position, which is being squeezed out at the back end of August. Obviously, it's squeezable at this time of the year. I think the markets sold the dollar and then paused a little bit,” Juckes said.
The dollar fell 0.34 per cent against the Swiss franc to 0.81085.
The Japanese yen, meanwhile, weakened despite weaker-than-expected economic growth data, with the dollar last up 0.11 per cent at around 159.49 yen.
Joint US-Japanese efforts to curb the yen’s weakness have added another layer of uncertainty to currency markets, with investors increasingly focused on whether the Bank of Japan will raise interest rates in the near term.
Japanese and US authorities intervened in currency markets in late July to stem the yen’s decline.
“While the market is pricing in a sharper BoJ rate hiking cycle, USD/JPY could trade higher on the back of strong global risk sentiment and elevated US terminal rate pricing despite a modest US inflation print,” Morgan Stanley analysts led by David Adams said in an investor note.
China’s industrial output growth also slowed in July, while retail sales increased less than expected, according to data released on Monday.
The dollar weakened 0.03 per cent to 6.742 against the offshore Chinese yuan. - August 18, 2026
