Oil extends rally as US-Iran standoff keeps Strait of Hormuz tensions high

SINGAPORE, 24 SEPTEMBER 2026 —

Global Oil Prices Climb as US-Iran Stalemate Keeps Strait of Hormuz Blockade in Place, Fueling Geopolitical Premiums

Brent crude futures surged to US$103.51 a barrel at midday on September 24, extending gains from the previous session’s 4% rally, as stalled US-Iran diplomacy left the Strait of Hormuz—a critical chokepoint for global oil flows—under continued tension. The deadlock has sent crude prices higher, reinforcing a geopolitical premium that analysts warn could persist as long as Tehran and Washington remain deadlocked over Iran’s demands for lifting sanctions and reopening the waterway.

The escalation shows the fragile balance between diplomacy and military posturing in the Middle East, where Iran’s refusal to back down from its conditions—including the lifting of a US naval blockade—has left traders bracing for prolonged disruption. While Brent and West Texas Intermediate (WTI) futures both climbed modestly in early trading, the underlying uncertainty has kept markets on edge, with physical oil supplies still far from normalisation despite recent price volatility.

At 0630 GMT (2:30pm Singapore time), Brent crude rose 43 cents (0.4%) to $103.51, while WTI advanced 35 cents (0.4%) to $92.51, though both benchmarks had earlier dipped in Asian trade as investors grappled with the lack of clarity. The rally followed a sharp 4% jump the prior session, reflecting growing concerns that the Strait of Hormuz—through which 20% of the world’s seaborne oil passes—could remain a flashpoint unless Iran’s demands are met.

Iran’s stance remains unyielding. A senior Iranian official, speaking after President Ebrahim Raisi’s address to the UN General Assembly, reiterated that Tehran would never surrender to US pressure and was now reviewing Washington’s response to its peace proposals. The proposals, first unveiled earlier this month, centre on lifting the US-led naval blockade and reopening the Strait of Hormuz, a move that would immediately ease tensions in the Persian Gulf.

Yet progress appears distant. Iran’s Security Chief Mohsen Rezaei had warned on September 23 that the strait would not reopen unless Iran’s conditions were fully met. Meanwhile, US officials signalled a mix of caution and resolve.

US Secretary of State Marco Rubio told reporters that any deal with Iran would require "hard work over a period of time", while acknowledging that President Donald Trump retains military options—a reminder of the administration’s willingness to escalate if diplomacy fails.

The geopolitical overhang has had a disproportionate impact on Brent, which remains more exposed to Middle East disruptions than WTI, according to Priyanka Sachdeva, head of market insights at Phillip Nova. "Brent retains a larger geopolitical and sea-route premium because international crude is more directly exposed to Hormuz disruption," she noted, adding that WTI benefits from relatively insulated US supply.

The divergence highlights how global oil markets are now segmented by risk exposure, with Brent trading at a premium as traders price in the possibility of supply chain disruptions in the event of conflict.

Adding to the market’s jitters were reports of potential US diesel export curbs, though the White House swiftly denied any imminent ban. Politico had earlier reported that the Trump administration was preparing plans for a 90-day diesel export restriction, a move aimed at stabilising domestic fuel prices.

However, US Energy Secretary Chris Wright dismissed the idea on September 23, stating that a ban "would not work"—a stance echoed by analysts who warned it could worsen global supplies and further disrupt economies already strained by high energy costs.

Data from the US Energy Information Administration (EIA) showed that distillate stockpiles, including diesel and heating oil, fell by 428,000 barrels last week to 107.4 million barrels, while crude inventories rose by 3 million barrels to 426.4 million barrels. Though the crude build exceeded analyst expectations—who had forecast a 641,000-barrel draw—the figures did little to ease concerns about tightening supplies in the face of geopolitical risks.

For Malaysia, where refined fuel imports and maritime trade through the Strait of Hormuz play a critical role in the economy, the stalemate poses direct risks. The country’s Petronas and Shell Malaysia—key players in the downstream sector—could face higher feedstock costs if Brent prices remain elevated, while shipping and logistics firms operating in the region may see insurance premiums rise as tensions persist.

The Malaysian government, which has previously urged de-escalation in the Strait, may now need to monitor supply chain vulnerabilities more closely, particularly as global diesel demand—a major export for Malaysian refiners—remains under pressure.

Regionally, Southeast Asian economies heavily reliant on Middle East oil imports, including Singapore, Thailand, and Indonesia, are also keeping a watchful eye on developments. The Association of Southeast Asian Nations (ASEAN) has historically avoided taking a formal stance on US-Iran tensions, but the prolonged uncertainty could force member states to diversify energy sources or increase strategic reserves as a precaution.

As of midday on September 24, the market’s focus remains squarely on diplomatic breakthroughs—or the lack thereof. With Iran showing no signs of backing down and the US maintaining a hardline stance, the Strait of Hormuz could remain a wildcard for oil prices in the coming weeks.

Traders will be closely monitoring any shifts in rhetoric from Tehran and Washington, as well as physical supply data, for signs of whether the current rally will sustain or reverse course. For now, the geopolitical premium—and the risk of further escalation—remains the dominant force shaping global oil markets.