Oil rises as U.S.-Iran peace talks stall, gas tops $4.32

Oil prices rose on Tuesday as U.S.-Iran peace talks showed signs of stalling, with President Donald Trump accusing Tehran of delaying negotiations in hopes of outlasting the White House ahead of November's midterm elections.

"They thought they were going to outwait me," Trump said during a televised cabinet meeting. "So far, they haven't gotten there. We're not satisfied with it, but we will be. Either that, or we'll have to just finish the job."

The standoff comes as U.S. gasoline prices averaged $4.32 a gallon on June 1, according to AAA data, with Republicans concerned that rising fuel costs could cost the party control of Congress. U.S. forces launched self-defense strikes on southern Iran on Monday, prompting Tehran to accuse Washington of violating the two countries' precarious cease-fire that took effect April 7.

The breakdown in talks threatens to prolong the conflict that began Feb. 28, keeping Iran's chokehold on the Strait of Hormuz — through which one-fifth of the world's oil and natural gas flows — intact and sustaining upward pressure on global crude benchmarks. The last time a major supply disruption threatened the strait, in 2019, Brent crude spiked more than 15 percent within two weeks before stabilizing.

Nuclear program and sanctions remain sticking points

The negotiations have stumbled over two core issues: Iran's nuclear capabilities and the reopening of the Strait of Hormuz. A potential deal could have seen Washington offer sanctions relief in exchange for Tehran giving up its stockpile of highly enriched uranium, according to regional officials and a senior Trump administration figure cited by the Associated Press. Trump appeared to reject that concession, saying, "We're not talking about any easing of sanctions, no money, no nothing."

U.S. Secretary of State Marco Rubio told Congress on Tuesday that Iran had "agreed to negotiate aspects of their nuclear program that just a month ago, just a year ago, they were refusing to even mention." He cautioned, however, that there is "not a guarantee that ultimately it will lead to a deal that's acceptable to the Senate or acceptable to the American people."

Israel's Lebanon campaign adds another layer

The peace talks faced an additional hurdle as Israel intensified its military campaign against Hezbollah in Lebanon. Iran has insisted that any cease-fire must also cover Lebanon, where Hezbollah remains one of its chief allies. Trump intervened directly, calling Israeli Prime Minister Benjamin Netanyahu in what Axios described as an "expletive-laden" conversation, warning that escalation in Beirut could derail the broader U.S.-Iran negotiations.

Trump later announced on Truth Social that he had secured a partial cease-fire in Lebanon, with both Hezbollah and Israel agreeing to halt attacks on each other. Netanyahu struck a defiant tone in response, saying Israeli forces "will continue to operate as planned in southern Lebanon" and that if Hezbollah does not cease attacks, "Israel will attack terror targets in Beirut."

The conflict has already killed thousands in Iran and Lebanon, according to their respective health ministries, while 13 U.S. service members have died. For energy markets, the key variable remains the Strait of Hormuz. Trump said the waterway will "be open to everybody" and suggested the United States would "watch over it," without specifying how.

With the current conflict now in its fourth month and talks showing no clear path to resolution, traders are pricing in a sustained risk premium that keeps gasoline elevated and threatens to feed into broader inflationary pressures ahead of the November midterms.

This article is for informational purposes only and does not constitute investment advice.