Oil pushed higher as a peace deal between the US and Iran remains elusive, prolonging the effective closure of the vital Strait of Hormuz and the disruption to global energy shipments.

Brent crude rose 3.4% to settle near $108 a barrel, while West Texas Intermediate closed near $102. US President Donald Trump said “it’s just a question of time” before Iran capitulates, a day after the US leader said a fragile ceasefire between Tehran and Washington was on “massive life support.”

The ceasefire has been in place since early April and has held even after a series of flareups in violence recently, including attacks on ships. The near-halt of traffic through the strait that connects the Persian Gulf to open seas has significantly disrupted global supplies of crude, natural gas and fuels, stoking fears of reignited inflation.

Iran responded to Trump’s peace proposal by demanding the US lift a naval blockade and provide sanctions relief, while maintaining a degree of control over traffic through the Strait of Hormuz, said a person familiar with the matter, who asked not to be identified discussing sensitive information.

“With the latest breakdown in negotiations, the risk is that the closure of the Strait of Hormuz will drag on, and the physical market will tighten again as the temporary factors that have helped ease shortages disappear,” said Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management.

Oil shipments from Iran’s main export terminal appear to have come to a standstill over the past several days, according to satellite images, in by far the longest stretch since the start of the war. The country’s oil exports are a critical source of revenue for its economy and remain an important part of global energy supply.

A shrinking global supply cushion is translating into higher energy costs. Fuel prices at the pump in the US have jumped since the war began, stoking inflation and heaping political pressure on Trump and the Republican Party ahead of midterm elections in November. In response, the US released oil from its emergency reserves at a record pace last week.

“Consumers are doing their best to absorb higher energy costs, but they’re not finding much relief elsewhere,” said Bret Kenwell, analyst at eToro, which tracks retail investing. “In other words, inflation pressure isn’t just at the pump, it’s showing up across the household budget.”

The war is likely to feature when Trump meets President Xi Jinping this week. China is the biggest buyer of the Islamic Republic’s oil and a strategic partner of Tehran. The US Treasury Department on Monday sanctioned more entities for helping to sell Iranian oil to China.

While there’s little sign of an immediate resolution to the war, gauges of market strength have weakened in recent sessions as refiners dial back their buying. On Tuesday, Brent’s prompt spread was near $4 a barrel in backwardation, a premium on immediate supplies that signals a tight market, compared with a high of almost $10 early last month.

The Energy Information Administration on Tuesday forecast that crude production will jump to a record 14.1 million barrels a day in 2027, as some domestic producers leverage higher oil prices to increase drilling activity. The agency now sees global demand growing by just 200,000 barrels a day this year, compared with an earlier estimate of 1.2 million.

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