Oil rises as uncertainty continues over reopening of Strait

Oil prices surged 5% on Monday after Iran and the United States clashed over compensation demands, casting doubt on a deal to reopen the Strait of Hormuz. Iran insisted the U.S. must lift sanctions and fulfill several other conditions, while President Donald Trump demanded Iran pay compensation for all lives lost. Brent crude futures rose $4.17, or 4.99%, to $87.72 a barrel, and U.S. West Texas Intermediate crude futures climbed $3.95, or 5.05%, to $82.13.

This marked the steepest gain since July 29 for both contracts. The increase came as Iran reportedly nearing a final agreement with Oman to define new shipping lanes, but insisted U.S. address compensation and sanctions before reopening the vital waterway. Iran and the U.S. are not currently in negotiations, and Tehran will not begin talks while Washington remains in violation of a June interim deal.

Traders are concerned about potential supply disruptions, with the Iran-aligned Houthis striking Saudi Aramco's Jazan refinery and other attacks on oil facilities in the region. Meanwhile, Ukraine continued targeting Russia's energy infrastructure, adding to supply uncertainties.