Oil rises 3% as Iran tempers hopes of Hormuz reopening

Oil prices surged nearly 5 percent on Monday after Iran and the United States exchanged 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 crucial waterway could reopen, while President Donald Trump stated Iran must pay compensation for all lives lost or severely hurt by the country.

Brent crude futures rose 4.99 percent to $87.72 a barrel, while U.S. West Texas Intermediate crude futures climbed 5.05 percent to $82.13. Both benchmarks had fallen over 7 percent the previous week on hopes of a possible reopening, which would account for a fifth of global oil and liquefied natural gas supplies. Iran reportedly had nearly finalized an agreement with Oman to define new shipping lanes, but insisted the U.S. must make further concessions, including compensation and an end to sanctions and military threats.

Iran and the U.S. remain unengaged in direct talks, with Tehran unwilling to commence them while Washington remains in violation of a June interim deal. Meanwhile, disruptions to supply continued, with the Iran-aligned Houthis attacking Saudi Aramco's Jazan refinery and crude oil stocks in the U.S. Strategic Petroleum Reserve dropping to their lowest level since January 1983.