Oil rose as traders assessed upcoming peace talks between the US and Iran following a weekend of flare-ups over the Strait of Hormuz that served as a reminder of the fragility of their truce.
West Texas Intermediate rose more than 2% to settle near $71 a barrel. Brent settled up 1.6%. Both Tehran and Washington will stand down on their tit-for-tat attacks for now and vessels can move freely through Hormuz, according to a US official who spoke on condition of anonymity. US President Donald Trump said the two sides are set to resume peace talks in Doha on Tuesday.
Iran said on Monday it will send a delegation of experts to Doha but will not meet directly with the US team, according to a Telegram post from the foreign ministry. It also said it will move forward with plans to control maritime traffic through the Strait of Hormuz even without Oman.
There was a drop in observed transits in the waterway over the weekend amid the unrest. Global investors, shipowners and insurers are closely watching activity in the chokepoint, which stands as a litmus test of whether a peace deal will endure and whether heavily disrupted supply chains can start to normalize.
“While traffic is morning through the Strait, I’m hearing it has slowed compared to last week because of the unrest,” said Dennis Kissler, head of energy trading at BOK Financial Securities Inc. “The smaller supplies are being priced in here, plus futures had been oversold, so a sharp correction is due.”
Oil has erased almost all of its wartime gains since the US and Israel first attacked Iran at the end of February. About a fifth of the world’s crude and liquefied natural gas traveled through the Strait of Hormuz before the conflict, and a resumption in negotiations offers the prospect of an eventual full reopening.
“The market feels increasingly comfortable treating these moves as tactical rather than structural,” said Haris Khurshid, chief investment officer at Chicago-based Karobaar Capital LP. “Until something fundamentally changes, traders are happy to fade both the rallies and the selloffs.”
On Saturday, the Kiku, which was carrying Qatari oil, was attacked in the strait. The very large crude carrier had loaded about 2 million barrels of oil in Qatar and last signaled its location off Fujairah, a United Arab Emirates port in the Gulf of Oman.
Oil Prices
- Brent for August settled up 1.6% at $73.15 a barrel.
- The August contract expires on Tuesday. More-active September futures climbed 1.8% to $73.91 a barrel.
- WTI for August added 2.2% to settle at $70.75 a barrel.
Over the weekend, a Saudi Aramco-operated helicopter crashed in Ras Tanura — Saudi Arabia’s energy heartland — near the Persian Gulf coast, the country’s press agency said, without elaborating on the cause. It wasn’t immediately clear if the incident affected any energy facilities.
Elsewhere, Russian President Vladimir Putin acknowledged that the country faces fuel supply problems including queues at gas stations. He confirmed that a full ban on diesel exports is among measures under discussion to mitigate supply tightness. An export ban could further tighten global flows, which are already under strain as a result of the war in the Middle East.