Oil rises on uncertainty over reopening of Hormuz

Oil prices surged on Monday due to uncertainty surrounding the potential reopening of the Strait of Hormuz, as Iran announced a deal with Oman to define new shipping lanes. Brent crude futures climbed 91 cents, or 1.09%, to $84.46 a barrel, while U.S. West Texas Intermediate crude futures increased 61 cents, or 0.78%, to $78.79 a barrel.

Both benchmarks had declined over 7% the previous week due to optimism that Iran and Oman were nearing a deal that would restore the Strait of Hormuz, a key route for a fifth of the world's oil supply during the war. Despite Iran stating on Sunday that a deal with Oman was in its final stages, it reiterated that the waterway would remain closed until the U.S. adhered to additional conditions, including compensating Iran for damages sustained from its attacks.

Tim Waterer, chief market analyst at KCM Trade, noted that traders have been conditioned by the constantly shifting nature of the negotiations and are awaiting concrete evidence, such as verified tanker movements or formal agreements, before further reducing risk premiums. Iran and the U.S. are not currently in negotiations, and Tehran will not initiate them as long as Washington fails to meet the interim deal conditions signed in June.

Iran also threatened further disruptions to supply by attacking a Saudi oil plant over the weekend. The Iran-aligned Houthis claimed responsibility for hitting Saudi Aramco's Jazan refinery, two days after Saudi Arabia signed a defense pact with Turkey and Pakistan in response to regional instability stemming from the U.S.-Israeli conflict with Shi'ite Iran.

Additionally, the United Arab Emirates' ADNOC reported on Friday that 15 of its vessels had been targeted while transiting the Strait of Hormuz since the onset of the conflict.