Oil prices rose on Monday as uncertainty over the reopening of the Strait of Hormuz grew, with Iran insisting that a deal with Oman would only happen once Washington met certain conditions. Brent crude futures rose 91 cents or 1.09%, to $84.46 a barrel by 0056 GMT, while U.S. West Texas Intermediate crude futures rose 61 cents, or 0.78% to $78.79 a barrel.
Iran's Conditions for Reopening the Strait
Iran said on Sunday that a deal with Oman was in its "final stages" but insisted that the waterway would only reopen once Washington met other conditions, including U.S. compensation to Iran for its widespread attacks. Iranian Foreign Minister Abbas Araqchi said on Sunday that Tehran would not start talks with the U.S. as long as Washington breached an interim deal signed in June.
Attacks on Oil Infrastructure Raise Concerns
A Saudi oil plant was attacked over the weekend, with the Iran-aligned Houthis claiming responsibility for hitting Saudi Aramco's Jazan refinery. The attack comes two days after the kingdom signed a defense pact with Sunni Muslim allies Turkey and Pakistan in response to growing regional instability from the U.S.-Israeli war on Shi'ite Iran.
Oil Prices Reflect Uncertainty
Traders have been conditioned by the on-again, off-again nature of the negotiations and are waiting for tangible evidence, such as verified tanker movements or formal agreements, before further unwinding the risk premium, said Tim Waterer, chief market analyst at KCM Trade. The Iran-aligned Houthis said they had hit Saudi Aramco's Jazan refinery on Sunday, two days after the kingdom signed a defense pact with Sunni Muslim allies Turkey and Pakistan.
Threats to Global Oil Supply
The Strait of Hormuz is a critical waterway that carried a fifth of the world's oil before the war. A further threat to supply comes from the United Arab Emirates' ADNOC, which said on Friday that 15 of its vessels had been attacked transiting the Strait of Hormuz since the beginning of the conflict.
What's Next for Oil Prices
The uncertainty surrounding the reopening of the Strait of Hormuz is likely to continue to impact oil prices in the coming days. With no clear timeline for the reopening of the waterway and ongoing attacks on oil infrastructure, traders will be watching closely for any developments that could impact global oil supply.
Source: Joy Online
