Oil prices near 4-month high as Iran and Oman delay Strait of Hormuz talks

Oil prices reached a four-month high on Monday as Iran and Oman delayed talks in Muscat regarding the Strait of Hormuz. The conflict in Yemen escalated on Sunday when government forces attacked Iran-backed Houthi rebels along the Red Sea coast, and the Houthis fired into Saudi Arabia. Yemen vowed to deploy more forces to the Red Sea coastal region following the Houthi capture of the port city of Mokha and an island on the Bab el-Mandeb Strait.

This strait serves as a crucial alternative shipping route for Saudi energy products due to the U.S.-Iran war severely hindering the Strait of Hormuz. Oman's Foreign Minister postponed a meeting with Iran and other regional countries to discuss the Strait of Hormuz, citing the need for consensus. Iran acknowledged postponing the talks at the request of some regional countries.

Saudi Arabia submitted amendments to the Iran-Oman agreement, expressing concerns over the deal's potential long-term impact on the Strait of Hormuz for other Gulf Cooperation Council countries. Despite optimism from Iran, Oman, and Pakistan regarding a new mechanism to control commercial traffic in the strait, oil prices surged as tensions between Iran and the U.S. remained high.

Both Brent crude and U.S. benchmark crude prices increased by 3.2%, reaching $107.94 and $103.26 per barrel, respectively. Iranian President Massoud Pezeshkian claimed a constructive exchange with the UAE Crown Prince, agreeing to 'turn the page' and build a future together after the U.S. and Israel initiated strikes on Iran in late February.