Oil prices climbed more than 1% on Monday as prospects of reopening the Strait of Hormuz remained stuck in limbo, according to Business Today. Brent crude gained 1.32% to $84.65 a barrel around 7:30 am IST, while WTI crude rose 1.04% to $78.99 a barrel. The move followed a week in which both benchmarks fell more than 7% on expectations that Iran and Oman were close to reaching an agreement that could restore shipping through the strait.
Price action and Hormuz uncertainty
Business Today reported that the waterway carried a fifth of the world's oil before the war. The latest rebound reflects uncertainty over whether a shipping-lane deal between Iran and Oman can be finalised, with Tehran demanding more from Washington before the strait reopens.
| Benchmark | Monday price | Daily change | Last week's move |
|---|---|---|---|
| Brent crude | $84.65 a barrel | +1.32% | Down more than 7% |
| WTI crude | $78.99 a barrel | +1.04% | Down more than 7% |
Iran-Oman shipping-lane deal
On Sunday, Iranian foreign minister Abbas Araqchi said the agreement with Oman was in its "final stages", according to Iran's Mehr news agency. The pact would establish new shipping lanes through the Strait of Hormuz, but those lanes would only be used once the US meets Tehran's conditions and the waterway is reopened, Mehr quoted him as saying.
The pact would establish new shipping lanes through the Strait of Hormuz, but these would only be used once the US meets Tehran's conditions and the waterway is reopened.
Iran has said those conditions include:
- Compensation
- An end to sanctions
- An end to military threats from the US
Business Today reported that the two nations have not engaged in direct dialogue. Araqchi said Tehran would not enter talks with Washington while the US was breaching an interim agreement signed in June. Messages between the two sides were instead being exchanged through intermediaries.
Houthi attacks and Jazan refinery
The uncertainty around Hormuz comes alongside attacks involving another key oil-producing country in the region. The Iran-aligned Houthi rebels said on Sunday that they had attacked Saudi Aramco's Jazan refinery. Saudi Arabia's energy ministry confirmed that a fire had broken out at the refinery, said the blaze had been extinguished, reported no injuries and said authorities were dealing with the incident, but did not provide a cause, Business Today reported.
The Houthis have also targeted shipping around the Red Sea and Gulf of Aden, another oil chokepoint on the opposite side of the Arabian Peninsula. Business Today reported these attacks have taken place alongside Iranian strikes on shipping in the Strait of Hormuz.
Last month, the Yemeni rebel group announced a naval blockade against Saudi Arabia in the Red Sea, saying it was in response to what it described as a Saudi siege on the Houthis in Yemen. Riyadh has denied the allegation and supports Yemen's internationally recognised government, Business Today reported.
Market assessment
The developments have kept uncertainty over the security of oil shipments through the region in focus as markets assess when the Strait of Hormuz could reopen. The United Arab Emirates' ADNOC said on Friday that 15 of its vessels had come under attack while passing through the Strait of Hormuz since the conflict began, according to Business Today.
Though oil markets have remained volatile amid the ongoing geopolitical chaos, the spike is far lower than the $126 per barrel levels seen earlier during the war, Business Today reported.
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