LONDON – Oil prices rose on Tuesday as negotiations between the United States and Iran over a peace deal ​and the reopening of the Strait of Hormuz hit an impasse, while uncertainty over the global inflation outlook tempered global stocks.

Brent crude futures have risen 5 percent in the last two days alone and were last around $88 a barrel, their highest since July 31 and nearly 25 percent above early July's near-four-month ​lows.

"We're now in a bit of a Mexican standoff, if you'd like, in terms of who blinks first," said Tony Sycamore, a market analyst at ​IG.

"This is going to be almost a war of attrition now," he said. "You probably can see the (oil) market sitting around ⁠the $75 to $95 range while we wait to see who blinks first."

While Wednesday's US July consumer price report will not capture the most recent rise in energy costs, ​it could still prove instrumental in setting expectations for September's Federal Reserve meeting, for which money markets show there is a 50/50 chance of a hike .

"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.

US Treasury yields rose in Europe, in line with a modest sell-off in global bond markets. Two-year Treasury yields were up 1 basis point at 4.253 percent, while 10-year yields were up 2 bps ​at 4.72 percent.

"After last week when it felt like the doves were in the ascendant again, the latest news has pushed things in a more hawkish direction, with ​yields and commodity prices both moving higher," Deutsche Bank strategist Jim Reid said.

Europe's STOXX 600 drifted in early trading, but was still not far off last week's record highs, while MSCI's ‌All-World index ⁠edged 0.1 percent lower. Nasdaq futures rose 0.1 percent, while those on the S&P 500 were flat. The benchmark indexes fell on Monday.

Overnight, Nvidia said it had teamed up with six major financial institutions including BlackRock, Apollo and Goldman Sachs to create a set of funding measures worth more than $500 billion for AI infrastructure.

It did not disclose much more in the way of detail, such as financial terms, investment commitments or how the planned $500 billion might fit into existing funding deals.

"A small part of me was ​left wondering whether this is how it ​felt when sub-prime mortgages first became ⁠a mainstream product - the innovation that eventually helped trigger the GFC (global financial crisis)," Sycamore added.

Highlighting some of the investor concern was another sell-off in Nvidia's bonds. Its 2 percent bond maturing in 2032 was last yielding 4.887 percent on the Tradegate platform, up nearly 7 ​bps from Monday.

Meanwhile, Intel raised $20 billion through a share sale, the first offering of its stock since the chipmaker listed ​in 1971. Intel shares ⁠in Europe rose around 1 percent.

Among currencies, the yen was back in the spotlight, as it weakened beyond 159 again and was off last week's high of 155.20 after several suspected rounds of intervention, including a joint move by Japan and the United States.

A holiday in Japan made for thinner trading than usual — often seen as a possible catalyst for intervention, ⁠as smaller ​trades can have a far greater price impact than in normal conditions.

The Australian dollar dipped 0.07 percent to $0.7049 after ​the Reserve Bank of Australia (RBA) held its cash rate steady at 4.35 percent for a second meeting in a row, but said it might hike again, if needed, to control inflation.

Elsewhere, gold , which has risen by 8 percent ​so far this month, was 0.6 percent lower on the day at $4,365 an ounce.