By Robert Harvey
LONDON, Aug 18 (Reuters) - Oil prices rose for a third session on Tuesday as prospects receded for a deal to end the Middle East war, with Iran saying it would adopt a more offensive stance and the U.S. ruling out extending a ceasefire deal, heightening worries about prolonged energy supply disruptions.
Brent crude futures climbed 35 cents, or 0.39%, to $91.22 a barrel by 0827 GMT. U.S. West Texas Intermediate crude futures were up 81 cents, or 0.96%, at $85.31 a barrel.
Both contracts
were on course for their third straight day of gains, with Brent touching its highest since July 30 during the session and WTI since July 31.
"Sentiment remained supported by US President Donald Trump's decision not to extend the US-Iran peace agreement and continued security concerns in the Strait of Hormuz," ING analysts wrote in a note.
Outward progress on peace talks and resumption of oil tanker traffic through the strategic Strait of Hormuz has halted, threatening to extend the conflict the United States and Israel launched with attacks on Iran on February 28.
Iran will shift to a "fully offensive" military posture as efforts have stalled towards a permanent end to the war, a senior Iranian official told Reuters on Monday, as Washington ruled out extending its temporary ceasefire pact.
"The lack of any kind of deal will have an impact on oil price expectations further out in 4Q and even in 2027," said DBS Bank's head of energy research Suvro Sarkar.
A projectile struck a vessel transiting out of the Strait of Hormuz on Tuesday in the latest of the attacks that have kept crossings to the single digits, despite a slight rise from the weekend, tracking data showed.
Saudi Aramco has resumed oil loadings from inside the Strait of Hormuz, and is offering cargoes for loading via ship-to-ship transfers off Fujairah in the UAE.
"It is probably in Iran's power to fully halt the flow of oil out of the Strait of Hormuz whenever they find it suitable. Or they will soon have built the capability of that. Iran is for sure not just sitting still waiting for new US sanctions," said SEB analyst Bjarne Schieldrop.
Iran has separately been negotiating with Oman an agreement on managing the Strait of Hormuz and says they are close to a deal. But Trump responded to those talks with a threat to bomb the Gulf state, a longstanding U.S. security partner.
Elsewhere in the Middle East, Yemen's Houthis launched missiles in an attack on vessels they described as a Saudi military ship and four escorts in the Red Sea, their military spokesperson, Yahya Saree, said on the Telegram messaging app.
(Reporting by Robert Harvey in London, Ishaan Arora in Bengaluru and Trixie Yap in Singapore; Editing by Clarence Fernandez, Christian Schmollinger and Saad Sayeed)
