LONDON: Oil rose as Iran says it wouldn’t soften its conditions to reopen the Strait of Hormuz after President Donald Trump rejected its proposal to do so, dashing hopes of a speedy resumption of traffic through the crucial waterway.
Brent advanced to around US$107 a barrel, while West Texas Intermediate climbed above US$94.
Tehran’s conditions are something Washington might have agreed to about a year ago, Trump told Axios in an interview on Sunday, saying that Iran has overplayed its hand.
The US president said he expects negotiations to resume this week, Axios said.
Oil’s gains are likely to be muted, as the market wasn’t expecting the strait to reopen in seven days, said Suvro Sarkar, head of energy research at DBS Bank Ltd. “We don’t think this changes things much.”
Crude prices swung last week on mixed signals over the talks, recovering Middle East flows and uncertainty over US measures to curb record diesel prices.
Trump said the White House was looking at curbs on exports of the fuel “very seriously”. Brent was up about 75% this year as the US-Iran conflict entered its eighth month, adding to inflationary pressures.
The path back to talks remains uncertain. Negotiators had explored a deal to reopen the waterway and for Washington to lift a blockade of Iranian ports, according to a person familiar with the matter.
The agreement would have been similar to the memorandum of understanding reached in mid-June, which led to a fragile ceasefire before collapsing.
The Islamic Republic will probably make its final deliveries of oil to China within two weeks, as Beijing substantially reduced its support to the country, Treasury Secretary Scott Bessent said on Fox News.
Only about 15 million barrels of Iranian crude remain on the water, adding pressure on Tehran to reach a deal, he said.
Traders will continue to monitor physical flows through Hormuz, which carried about a fifth of the world’s crude and liquefied natural gas before the start of the war.
Trump said a “record amount” of oil was taken out of the strait on Saturday night, while the Fars news agency reported Iranian forces targeted ships using unauthorised routes through the waterway.
Tensions remain elevated in the Middle East. Saudi-led coalition forces in Yemen said on Saturday that air defences intercepted Houthi drones headed toward Riyadh and a missile targeting Khamis Mushait in the south. — Bloomberg
