Oil Rises as US-Iran Peace Hopes Fade, Hormuz Shipping Slows
NEW DELHI/SINGAPORE — WEB DESK: Oil prices rose on Monday as diminishing prospects for a US-Iran peace breakthrough and a sharp slowdown in tanker traffic through the Strait of Hormuz intensified concerns over potential disruptions to global energy supplies.
Brent crude futures rose as much as 1% to $89.40 a barrel, while US West Texas Intermediate (WTI) crude climbed to $82.83 a barrel during Monday trading.
Earlier in the session, prices had been more subdued, with Brent trading around $88.55 a barrel and WTI at $82.26.
Both international benchmarks gained more than 5% last week as escalating tensions around the Strait of Hormuz returned a geopolitical risk premium to crude markets.
Hormuz shipping traffic drops sharply
The latest market concern centres on a dramatic reduction in commercial shipping through the Strait of Hormuz, one of the world’s most strategically important energy corridors.
Ship-tracking data from Kpler showed that only five commodity vessels crossed the strait on Saturday, while none were registered on Sunday. That compared with 31 vessels during the previous weekend.
The slowdown followed attacks involving oil tankers operating in the strait.
The United Arab Emirates has accused Iran of attacking a third tanker operated by Abu Dhabi National Oil Company (ADNOC) on August 14, after previously blaming Tehran for two other incidents involving ADNOC-operated vessels.
The attacks, together with an assault on a Saudi Aramco refinery, helped drive oil prices more than 5% higher last week.
US-Iran diplomacy remains stalled
Uncertainty over diplomatic efforts between Washington and Tehran is also supporting crude prices.
Iranian Foreign Minister Abbas Araghchi said over the weekend that Tehran had not made a decision on resuming negotiations with the United States.
Iran has acknowledged that messages are being exchanged through third countries, but has stressed that such communications should not be interpreted as renewed formal negotiations with Washington.
The absence of progress towards a lasting settlement has increased concerns among energy traders that disruptions around the Strait of Hormuz could persist.
US President Donald Trump, meanwhile, has urged Americans to accept somewhat higher gasoline prices while the conflict continues.
Why Strait of Hormuz matters to oil markets
The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea and is a critical route for international oil and liquefied natural gas shipments.
Major Gulf energy producers depend heavily on the waterway to move crude and petroleum products to international markets.
Any prolonged disruption to tanker traffic could therefore tighten global supplies and increase shipping, insurance and energy costs.
The recent fall in vessel movements has not yet demonstrated a complete shutdown of the waterway, but it has strengthened concerns about the reliability of energy shipments through the region.
Oil prices recover from early-August lows
The latest gains have pushed crude prices substantially above the lows recorded earlier this month as expectations for a more durable US-Iran settlement have weakened.
Market analysts say the direction of oil prices will now depend heavily on whether tensions around Hormuz escalate further.
Evidence of additional attacks or material damage to tankers and energy infrastructure could add another risk premium to crude prices. Conversely, progress towards a diplomatic settlement or a normalisation of shipping traffic could ease supply concerns.
For now, the combination of stalled diplomacy and sharply reduced tanker movements is keeping geopolitical risk firmly at the centre of global oil trading.
