WTI Oil Climbs Above $115 Amid Strait of Hormuz Standoff

The EUR/USD pair traded steadily near 1.1540 during Tuesday’s early Asian session, as investors remained cautious amid rising geopolitical tensions involving Iran.

Market sentiment is being shaped by renewed rhetoric from US President Donald Trump, who criticized a proposed ceasefire agreement with Iran as insufficient. He also warned of potential military action targeting key infrastructure, including power plants and bridges, if the Strait of Hormuz is not reopened by a stated deadline. Traders are closely monitoring developments surrounding the strategic waterway, a critical route for global energy supplies.

On the macroeconomic front, recent US data pointed to some softening in the services sector. The Institute for Supply Management (ISM) reported that its Services PMI fell to 54.0 in March from 56.1 in February, missing market expectations of 55.0 and indicating a slight loss of momentum.

Looking ahead, market participants are awaiting key US data releases later on Tuesday, including Durable Goods Orders and the ADP Employment report, which could provide further direction for the currency pair.

Meanwhile, expectations of a more hawkish stance from the European Central Bank (ECB) may lend support to the euro. Markets are increasingly pricing in two to three interest rate hikes in 2026, driven largely by persistent inflation pressures linked to rising energy costs.

Gold prices remained subdued during Tuesday’s Asian session, with XAU/USD trading within the previous day’s range as downside pressure persists but lacks strong follow-through.

Investor sentiment continues to be shaped by escalating geopolitical tensions surrounding Iran. Hopes for a last-minute diplomatic breakthrough have diminished ahead of US President Donald Trump’s deadline for reopening the Strait of Hormuz. The ongoing standoff has reinforced demand for the US Dollar, weighing on gold prices.

The greenback’s strength, supported by its safe-haven appeal during periods of uncertainty, has emerged as a key headwind for the non-yielding precious metal. At the same time, rising expectations of tighter global monetary policy are adding further pressure.

Markets are increasingly pricing in a more hawkish stance from major central banks, including the Federal Reserve, amid concerns that higher energy prices could reignite inflation. The recent surge in crude oil prices—reaching a four-week high—has reinforced these expectations following intensified rhetoric between the US and Iran.

Tensions escalated further after US warnings of potential strikes on critical infrastructure if no agreement is reached. In response, Iranian officials signaled firm resistance, raising the risk of a broader conflict in the Middle East. This backdrop continues to support elevated oil prices while limiting upside potential for gold.

Overall, the combination of a stronger US Dollar and expectations of higher interest rates keeps the near-term outlook tilted to the downside for gold.

Oil prices continued to climb during Tuesday’s Asian session, marking a third straight day of gains as markets remained on edge over escalating tensions in the Middle East.

Brent crude rose modestly to trade above $110 per barrel, while US West Texas Intermediate (WTI) outperformed, advancing above the $115 mark. The rally has been largely driven by concerns surrounding the Strait of Hormuz, a vital global chokepoint responsible for transporting roughly 20% of the world’s oil supply.

Recent disruptions to tanker traffic have already tightened supply expectations, prompting traders to factor in higher geopolitical risk premiums across energy markets.

Diplomatic efforts to ease tensions appear to be losing momentum. Iran has rejected a US-backed proposal that included a temporary ceasefire and a phased reopening of the strait, alongside broader discussions on sanctions relief and post-conflict reconstruction. Instead, Tehran has called for a permanent cessation of hostilities, legally binding security guarantees, the lifting of sanctions, and compensation for damages.

US President Donald Trump reaffirmed that the deadline for reopening the strait remains firm, warning that failure to comply could trigger targeted strikes on key Iranian infrastructure, including power and transport networks. His remarks have further heightened concerns about a potential escalation in the region.

The increasingly confrontational tone has kept oil markets volatile, with investors pricing in the risk of deeper supply disruptions across the Gulf.

Although OPEC+ has signaled a modest increase in output, analysts believe the additional supply may not be sufficient to offset potential losses if disruptions in the Strait of Hormuz intensify.

US equities closed modestly higher on Monday as investors weighed ongoing diplomatic efforts between Washington and Tehran, alongside a firm deadline set for reopening the Strait of Hormuz.

Markets reacted to comments from US President Donald Trump, who said discussions with Iran were still underway but reiterated that Tehran faces a strict deadline to restore access through the strategically vital waterway

Wall Street returned from the extended Good Friday holiday following a volatile but ultimately strong week, with major indices posting their best performance since November. The rally was initially fueled by optimism around potential de-escalation in the Middle East.

Attention remains firmly on diplomatic developments. A proposed framework involving a temporary ceasefire and phased reopening of the Strait of Hormuz has reportedly failed to gain traction, with Iran rejecting key elements of the plan.

The ongoing standoff has already had significant market implications. Oil prices remain elevated amid disruptions to flows through the Strait of Hormuz, which accounts for roughly one-fifth of global energy shipments.

On the economic front, recent labor market data pointed to underlying strength. The US economy added 178,000 jobs in March, well above expectations, although prior months saw notable revisions, highlighting ongoing volatility in employment trends.With the labor market holding up, attention is now turning to inflation. This week’s consumer price index (CPI) report will be closely watched for signs of how rising energy costs are feeding through to broader price pressures.