Oil prices steadied on Tuesday at more than one-week highs amid fading hopes of a deal between the U.S. and Iran to end their war and reopen the Strait of Hormuz, after President Donald Trump demanded compensation for damage the U.S. has incurred.
Oil Prices Flat as US-Iran Peace Deal Hopes Fade
Brent crude futures were flat at $87.81 a barrel by 0013 GMT, while U.S. West Texas Intermediate crude futures held at $82.20 a barrel. This stabilization comes after both benchmarks rose more than 5% on Monday to their highest since July 31.
US Demands Complicate Efforts to Reopen Strait of Hormuz
President Trump's response to Iran's conditions for a peace deal has complicated efforts to reopen the Strait of Hormuz. Trump demanded that Iran pay compensation for people killed in wars, attacks, and protests. This move is likely to complicate efforts to reopen the Strait of Hormuz, a critical waterway for global oil supplies.
Analysts Weigh in on US-Iran Tensions
Tim Waterer, chief market analyst at KCM Trade, said, "There appears to be a gulf, no pun intended, between the U.S. and Iran over what any agreement would actually look like." Waterer noted that some of the optimism that built up last week is being unwound, giving oil prices a decidedly bid tone.
Houthi Attacks Disrupt Saudi Aramco Operations
Meanwhile, Saudi Aramco has postponed the restart of its 400,000-barrel-per-day Jazan refinery to August 30 after the Houthis claimed two attacks on the plant on Sunday. Waterer said, "The chokehold risk around both the Strait of Hormuz and the Bab el-Mandeb remains highly significant. Even intermittent restrictions or the threat of further incidents keep insurance costs elevated and force longer shipping routes … hence energy flows look likely to stay constrained near term."
Iraq Raises Basra Medium Crude Price
In a related development, Iraq raised the September official selling price (OSP) for Basra Medium crude to Asia by $2.50 to minus $4 a barrel against the average of Oman/Dubai quotes. This move is likely to impact oil exports from Iraq in the coming months.
The stabilization of oil prices on Tuesday is a temporary reprieve from the ongoing tensions between the U.S. and Iran. As long as these tensions persist, oil prices are likely to remain volatile. The Strait of Hormuz remains a critical waterway for global oil supplies, and any disruption to its operations is likely to have significant impacts on energy markets.
Source: Joy Online
