Oil prices rose as hopes for an agreement diminished
Oil prices surged more than 1% on Tuesday as hopes for an agreement between the US and Iran to end the war and reopen the Strait of Hormuz faded after Trump demanded compensation from Tehran.
Brent crude futures rose $1.4, or 1.6%, to $89.12 a barrel as of 07:01 GMT, while WTI crude futures rose $1.35, or 1.64%, to $83.48 a barrel.
Both indicators had risen more than 5% on Monday, reaching their highest levels since July 31.
Prices increased on Monday after Trump added demands for compensation from Iran for those killed in wars, attacks, and protests to the conditions for a peace agreement. This demand is likely to complicate efforts to reopen the Strait of Hormuz.
Later in the day, Trump added that the US had taken control of the strait and was searching for Iranian mines along the strategic oil route.
A chasm appears to be widening between the US and Iran. Both sides are complicating matters in line with their interests. As a result, some of the optimism that built up last week is being unwound, giving oil prices a decidedly bullish tone.
Meanwhile, Saudi Aramco has postponed the restart of its 400,000-barrel-a-day Jazan refinery to August 30 after claiming the Houthis launched two attacks on its facility on Sunday.
The risk of congestion around both the Strait of Hormuz and the Bab el-Mandeb Strait remains significant. Even intermittent restrictions or the threat of further incidents keep insurance costs high and lead to longer shipping routes. Therefore, energy flows are likely to remain restricted in the near term.
A note stated that in the week ending August 7, net exports of crude oil and refined products through the Strait of Hormuz averaged 3 million barrels per day, compared to 4.4 million barrels the previous week.
Shipping data showed the number of ships passing through the Strait of Hormuz dropped to six on Monday; a significant decrease compared to the 10-day average of around 11 ships.
Meanwhile, oil leakage continues anyway from both blockade zones via ship-to-ship transfers and land transit routes. If these flows continue, the market will likely remain generally sluggish, between $75.00 and $95.00.
Meanwhile, Abu Dhabi National Oil Company (ADNOC) is holding its eighth spot crude oil auction since early June, as it works to transport oil through the Strait of Hormuz.
Related Articles
Oil prices continued their upward trend as concerns about the parties' consistency mounted
Oil prices remained stable despite hopes for a rapid reopening of the Strait of Hormuz diminishing
The IEA and OPEC lowered their 2026 oil demand forecasts; oil prices fell as a weak demand outlook offset supply concerns
