Oil Prices Hold Near One-Week Highs as US-Iran Peace Deal Hopes Fade

Post by : Saif

Oil prices remained near their highest level in more than a week as hopes for a peace agreement between the United States and Iran weakened, raising concerns about continued disruption to energy shipments through the Strait of Hormuz.

Brent crude futures slipped 10 cents, or 0.11%, to $87.62 a barrel, while US West Texas Intermediate crude fell 5 cents, or 0.06%, to $82.08 a barrel.

Both benchmarks had climbed more than 5% on Monday, reaching their highest levels since July 31.

US-Iran Dispute Adds Pressure to Oil Markets

Market optimism over a possible agreement between Washington and Tehran has weakened after US President Donald Trump demanded compensation from Iran for deaths and damage that he attributed to the country.

Iran has linked the reopening of the Strait of Hormuz to demands involving war reparations and the removal of US sanctions. Trump's response has raised concerns that negotiations could become more difficult.

The disagreement is being closely watched by energy markets because the Strait of Hormuz is one of the world's most important oil transportation routes.

Trump Says US Controls Strait of Hormuz

Trump later said the US had control of the strategic waterway and that American forces had swept the Strait of Hormuz for Iranian mines.

The comments added to uncertainty over when normal shipping could resume through the route.

Energy analysts say continued restrictions or the risk of further incidents could keep crude supplies constrained and increase shipping and insurance costs.

Oil Shipments Through Hormuz Decline

According to Barclays analysts, crude oil and refined-product net exports through the Strait of Hormuz averaged around 3 million barrels per day during the week ending August 7.

That was down from 4.4 million barrels per day during the previous week.

Lower shipments through the waterway are raising concerns about the availability of crude and refined products in international markets, particularly if disruptions continue.

Saudi Aramco Delays Refinery Restart

Saudi energy company Saudi Aramco has postponed the restart of its 400,000-barrel-per-day Jazan refinery until August 30.

The delay follows attacks claimed by Yemen's Houthis on the facility.

The development adds another risk to regional energy supplies at a time when shipping through both the Strait of Hormuz and the Bab el-Mandeb is facing disruption.

Shipping Risks Keep Energy Supplies Under Pressure

Market analysts say threats around major Middle Eastern shipping routes are continuing to affect the movement of oil and petroleum products.

Restrictions around the Strait of Hormuz and Bab el-Mandeb can force vessels to take longer routes, increasing fuel consumption, transportation expenses and insurance costs.

Even temporary disruptions could therefore have an impact on global energy markets if shipping companies remain cautious.

Read more: US Forces Seize Seventh Venezuela-Linked Oil Tanker in Caribbean

ADNOC Moves to Export Oil

The Abu Dhabi National Oil Company (ADNOC) has offered spot crude in a tender as the UAE state-owned energy company seeks to move oil from inside the Strait of Hormuz.

The latest tender is reportedly the company's eighth since the beginning of June.

Such measures show how oil producers in the Gulf are attempting to maintain exports despite restrictions affecting important maritime routes.

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