Oil prices rise as Iran, U.S. remain at odds over Hormuz reopening
Oil prices surged over 1% on Monday following Iran's refusal to modify conditions for reopening the Strait of Hormuz, despite U.S. President Donald Trump's rejection of Tehran's proposal. This uncertainty over the resumption of traffic through the vital oil shipping route raised concerns about the timeline for normalcy. As of 21:09 ET (01:09 GMT), Brent Oil Futures for November expired at $105.48 per barrel, marking a 1.1% increase, while West Texas Intermediate (WTI) crude futures also rose by 0.8% to $93.12 per barrel.
Iran proposed that the Strait of Hormuz reopen within seven days, contingent upon the lifting of the U.S. naval blockade, easing military pressure, removal of sanctions on Iranian oil sales, and a ceasefire. Iran has maintained its commitment to these conditions, even as President Trump suggested that negotiations with Iran might resume this week, according to an Axios report. Qatar has been mediating between the two parties in an attempt to revive talks.
The Strait, which facilitates around a fifth of global oil and liquefied natural gas supplies, has experienced a significant decrease in shipping activity. Iran-backed Houthi forces in Yemen have intensified attacks on Saudi Arabia and commercial shipping in the Red Sea, adding to supply concerns. Saudi Arabia reported intercepting two ballistic missiles and two drones launched by the Houthis, following successful interceptions of six missiles towards Taif and the Yanbu area earlier in the week.
The disruption has prompted Gulf producers to seek alternative methods of transporting crude. However, there are indications that some oil is still flowing through the strait at a higher rate. President Trump stated that more than 20 million barrels had traversed the Strait over the weekend, as per Axios. The market is also closely monitoring refined-product supplies, with diesel prices in Europe and the U.S. hitting record highs due to disruptions in oil and product exports from the Middle East and Russia, tightening fuel markets.
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