Oil prices rise on Iran-U.S. tensions as U.S. threatens to shut down Iranian airlines

Oil rose Tuesday amid concerns of growing Iran-U.S. tensions, after U.S. Treasury Secretary Scott Bessent told CNBC that all Iranian airlines will be shut down from Wednesday.

Futures for international benchmark Brent crude for November delivery gained 1.2% at $101.54 a barrel. U.S. West Texas Intermediate futures for October advanced 0.77% at $96.55 per barrel.

Bessent told CNBC that all Iranian airlines will be shut down from Wednesday. "How do we do that? That if they land, you cannot provide them with fuel. You cannot provide them with landing services, you cannot sell them tickets, or you will be knocked out of the dollar system," Bessent said on CNBC's "Squawk Box."

Investors are still eyeing a possible diplomatic solution to the Mideast conflict, following news that Iranian president Masoud Pezeshkian is set to fly to the United Nations in New York.

Pezeshkian will address the assembly and present Iran's positions on "international developments," with a particular focus on its war with the U.S. and Israel, according to the country's semi-official Tasnim news agency. Talks with the leaders of several countries are also scheduled to take place Sept. 22 to 26, and 28, on the sidelines of the event.

Attention will likely remain focused on diplomatic developments, said Lukman Otunuga, head of market research at online brokerage FXTM.

"Confirmation of direct talks between Washington and Tehran could place additional selling pressure on prices by improving expectations for regional supply," Otunuga said.

"Conversely, Tehran has warned that renewed escalation would trigger a significant response, which could push crude prices higher," he added.

—CNBC's Anniek Bao contributed to the report.