Oil prices rose on Monday as diplomatic efforts to end the war between the United States and Iran remained stalled, while shipping through the strategically important Strait of Hormuz slowed sharply, raising fresh concerns about global energy supplies. Brent crude rose 43 cents, or 0.5 percent, to $88.95 a barrel, while U.S. West Texas Intermediate (WTI) gained 25 cents, or 0.3 percent, to $82.65 a barrel, according to Reuters.
The modest increase came as hopes for a breakthrough in U.S.-Iran negotiations faded. The 60-day deadline set in an interim agreement expired without a broader peace deal, while disagreements over reopening the Strait of Hormuz and other issues continue to hamper diplomacy. Maritime transport through the waterway has also declined sharply following recent attacks on oil tankers. Kpler tracking data showed that only five cargo ships crossed the strait on Saturday, while none passed through on Sunday, compared with more than 130 daily ship transits before the war. The Strait of Hormuz is a critical global energy route, previously carrying around a fifth of the world’s oil and liquefied natural gas shipments. The sharp reduction in traffic has raised concerns about supply to the main Asian markets. The United Arab Emirates (UAE) has accused Iran of attacking three oil tankers operated by its state-owned Abu Dhabi National Oil Company (ADNOC) while transiting the waterway. The attacks have further raised concerns among shipping companies and energy traders. Meanwhile, Iran is working with Oman on an agreement to manage commercial shipping through the Strait of Hormuz. Tehran said it was working to finalize a joint statement on designated routes that would allow ships to transit the waterway.
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However, the diplomatic effort has yet to make progress as Iran maintains its demands over the US naval blockade and other issues. Washington and Tehran remain divided over the conditions necessary to restore the interim peace agreement. Despite the disruptions to shipping, analysts said oil prices could remain at current levels unless shipments through the Strait of Hormuz or other major routes such as the Bab el-Mandeb Strait are completely stopped. Saudi Arabia and the United Arab Emirates are also trying to maintain supply to Asian buyers through alternative arrangements. Energy markets are closely monitoring continued uncertainty because a prolonged disruption could drive up global crude oil prices, shipping costs and fuel prices.
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