US-Iran peace deadline lapses as Hormuz tensions deepen

Oil prices surged on Monday as speculation surrounding a potential U.S.-Iran peace deal dwindled and tanker traffic through the strategically important Strait of Hormuz slowed, intensifying market concerns about geopolitical risks, according to wire material. Brent crude futures rallied up to 1% to $89.40 per barrel, trading at $89.20 by 0229 GMT, while U.S. West Texas Intermediate crude futures increased by 44 cents to $82.83 a barrel.

The gains marked a more than 5% increase over the previous week, following attacks on tankers belonging to Abu Dhabi National Oil Company (ADNOC) in the Hormuz strait and a Saudi Aramco refinery. Iranian Foreign Minister Abbas Araqchi stated on the weekend that Iran had not yet decided to resume negotiations with the United States, while U.S. President Donald Trump encouraged Americans to tolerate slightly higher gasoline prices amid the ongoing conflict.

Priyanka Sachdeva, head of market insights for Phillip Nova in Singapore, noted that oil prices had largely recovered from early August lows, driven by fading hopes for a more permanent U.S.-Iran resolution and the re-emergence of geopolitical risk premiums in the market. However, she suggested that significant upside for oil prices was unlikely without clear evidence of renewed aggression in the Strait of Hormuz, particularly substantial damage to tankers or oil infrastructure.

Data revealed that shipping through the Strait of Hormuz had decelerated over the weekend, with only five commodity vessels transiting the strait on Saturday and none recorded for the following Sunday, as per Kpler's ship-tracking data. This figure contrasted sharply with 31 vessels that passed through the strait during the previous weekend.

The United Arab Emirates (UAE) accused Iran of striking a third ADNOC-operated vessel sailing through the strait on Friday, following earlier allegations of two other incidents involving ADNOC vessels in the region on Thursday evening.