Oil prices held near their highest level in more than a week on Tuesday, according to Business Today, as hopes that the US and Iran would reach a deal to end their war and reopen the Strait of Hormuz weakened. WTI crude stood 0.09% higher at $82.22 a barrel, while Brent crude edged up to $87.80 a barrel around 7:20 am IST. In the earlier session, both oil benchmarks had jumped more than 5%, reaching their highest levels since July 31.
Price Action and Sentiment
Business Today reported that US President Donald Trump responded to Iran's conditions for a peace deal by demanding compensation from Tehran for people killed in wars, attacks and protests, a move that complicated negotiations. Trump later said the US had control of the Strait of Hormuz and had swept the strategic waterway for Iranian mines. The fresh demands made an agreement to reopen the key oil route more difficult.
| Benchmark | Price (around 7:20 am IST) | Daily change | Previous session move |
|---|---|---|---|
| WTI crude | $82.22 per barrel | +0.09% | Jumped more than 5% |
| Brent crude | $87.80 per barrel | Edged up | Jumped more than 5% |
Oil prices had fallen more than 7% last week as hopes grew that Iran and Oman were close to reaching a deal that could lead to the reopening of the strait.
US-Iran Demands Thicken the Stalemate
According to Business Today, Iran has said the US must lift sanctions on Tehran and meet several other conditions before the Strait of Hormuz can be reopened. Tehran's conditions include:
- Compensation
- An end to sanctions
- An end to military threats from the US
Iran also stated it was close to a final agreement with Oman on new shipping lanes through the strait. However, Iranian foreign ministry spokesperson Esmaeil Baghaei said on Monday that the strait would remain closed until the US ended its naval blockade against Iran, as reported by local media. Speaking at a weekly press briefing in Tehran, Baghaei blamed the closure of the strategic waterway on military aggression by the US and Israel, according to Iran's semi-official Tasnim News Agency.
"As long as the US naval blockade continues, the necessary conditions for the reopening of the Strait of Hormuz do not exist." — Esmaeil Baghaei, per Tasnim News Agency
Baghaei also called on Washington to stop and reverse its "destructive actions" so that the two sides could negotiate their next steps. He said talks with Oman over maritime transit were being held only between the two neighbouring countries.
No Direct Negotiations, Says Tehran
Iranian foreign minister Seyed Abbas Araghchi said on Sunday that there were currently no active negotiations between Iran and the US. Speaking at the Foreign Ministry's Centre for Political and International Studies, Araghchi said, per Tasnim News Agency: "We currently have no negotiations with the United States. Intermediaries are still making efforts to find ways to resume negotiations. From our perspective, there can be no resumption of talks until the United States ends its violations of the Memorandum of Understanding (MoU) and makes amends for the breaches it has committed."
Araghchi said talks could not restart until Washington stopped violating the MoU and addressed the breaches. He confirmed that technical discussions with Oman on a revised maritime route through the Strait of Hormuz were nearing completion. However, he stressed that an agreement with Oman would not automatically mean the strait would reopen. "Of course, this does not mean the opening of the Strait of Hormuz. This agreement may be reached, but the opening of the Strait of Hormuz is subject to a series of conditions," Araghchi said.
Hormuz at the Heart of Supply Security
Business Today noted that the Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea and is a major route for crude oil and LNG shipments from Gulf exporters to global markets. The waterway carried a fifth of the world's oil and liquefied natural gas before the Middle East conflict began in late February.
The ongoing geopolitical circumstances have kept oil prices volatile amid concerns of an energy supply crunch. According to Business Today, even as prices continue to rise, the current spike is far lower than seen in the earlier phase of the conflict.
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