Oil edges higher as Iran tempers hopes of swift Hormuz reopening

Oil prices climbed nearly 5% on Monday as Iran and the United States engaged in demands for compensation, casting doubt on a deal to reopen the Strait of Hormuz. Iran insisted the U.S. must lift sanctions and meet other conditions before the waterway could be reopened, while President Donald Trump demanded Iran pay compensation for all lives lost and injuries sustained.

Brent crude futures rose $4.17, or 4.99%, to $87.72 a barrel, while U.S. West Texas Intermediate crude futures climbed $3.95, or 5.05%, to $82.13. Both benchmarks marked their highest gains since July 29 on both contracts. Earlier in the week, they had fallen over 7% on hopes of a deal between Iran and Oman that would reopen the strait, which transports a fifth of the world's oil and liquefied natural gas before the Middle East conflict began in late February.

Iran claimed it was close to a final pact with Oman to define new shipping lanes, but reiterated that the U.S. must meet additional conditions before the strategic waterway could be reopened. Iran and the U.S. are not currently in talks, and Tehran will not begin them while Washington remains in breach of an interim deal signed in June, according to Iranian Foreign Minister Abbas Araqchi.

Crude futures saw gains in early trade as the U.S./Iran peace deal appeared delayed, alongside strikes from Ukraine on Russian refineries and tankers in the Black Sea. Meanwhile, the Iran-aligned Houthis announced they had attacked Saudi Aramco's Jazan refinery, postponing its restart until August 30. This attack followed two recent Houthi assaults on Saudi Aramco refineries, as Saudi Arabia responded to regional instability caused by the U.S.-Israeli war with Iran.