Oil climbs as US-Iran talks stall, Asian markets await inflation cues

Oil prices extended their advance on Tuesday as diplomatic efforts between Washington and Tehran over a peace deal and the reopening of the Strait of Hormuz remained deadlocked. Brent crude futures rose to $88.00 per barrel, while US crude ticked up to $82.45, both touching their highest levels since July 31 after rallying roughly 5% in the previous session.

President Donald Trump responded to Iran's conditions for a peace agreement with his own demands, including compensation for casualties in regional conflicts. The rhetorical escalation is seen as complicating any near-term resolution to reopen the crucial waterway, keeping supply concerns elevated.

"We're now in a bit of a Mexican standoff in terms of who blinks first," said Tony Sycamore, a market analyst at IG. He suggested the oil market could remain rangebound between $75 and $95 while the standoff persists.

The renewed climb in fuel costs sharpens focus on the US July consumer price report due Wednesday. Economists expect a 0.1% monthly rise in headline inflation and 0.2% for the core measure. An upside surprise could revive bets on a Federal Reserve rate hike next month, with market odds currently split evenly.

"We think the risks are skewed towards a hot print, which would probably drive a rebound in rate expectations and potentially renewed worries about stagflation," said Jonas Goltermann, chief markets economist at Capital Economics.

Asian equities drifted as investors weighed the geopolitical backdrop. MSCI's broadest index of Asia-Pacific shares outside Japan was last up 0.2%, while South Korea's Kospi rose 0.3%. US futures pointed modestly higher, with Nasdaq futures up 0.28% and S&P 500 futures adding 0.1%.

In currency markets, the yen remained under pressure, trading on the weaker side of 159 per dollar and well off last week's high of 155.20. Traders stayed alert to potential intervention, including a possible joint action by Japan and the United States. Analysts at Nomura noted that while a breach of 160 seems unlikely in the near term, dip-buyers have emerged after the pair reached the 156-157 range.

The dollar found marginal support from higher oil prices, keeping the euro at $1.1546 and sterling at $1.3512. Spot gold rose 0.5% to $4,409.81 an ounce.

Elsewhere, Nvidia announced partnerships with six major financial institutions to launch compute financing platforms aimed at raising over $500 billion in third-party capital for AI infrastructure, underscoring the scale of investment in the sector.