Oil prices rose on Monday, surging back to $85 per barrel as a deal to reopen the Strait of Hormuz remains elusive, while Houthi rebels continue to launch attacks on Saudi Arabia’s oil infrastructure.
Brent, the benchmark for two thirds of the world's oil, was up 1.77 per cent to $85.03 per barrel at 4.06pm UAE time. West Texas Intermediate, the gauge that tracks US crude, climbed 1.83 per cent to $79.61 per barrel.
Brent crude and WTI are “extending gains as Iran and Oman remained short of an agreement to restore normal shipping through the Strait of Hormuz”, said Soojin Kim, research analyst at MUFG.
Ship traffic across the Strait of Hormuz, a vital waterway in the Arabian Gulf for global oil supplies, remains sparse, with only seven commodity vessels passing through on Sunday, Kpler data showed. Most of those took the route designated by Iran to cross the channel, with others going dark to avoid detection.
Meanwhile, 24 commodity vessels reportedly crossed the Bab Al Mandeb strait on Sunday.
A deal between Iran and the US to end the war and reopen the Strait of Hormuz remains elusive despite several rounds of negotiations.
Iran set six new conditions to reopen the channel, including lifting of a maritime blockade on Iranian crude as well as the withdrawal of US naval and air forces from around Iran.
Meanwhile, US President Donald Trump on Sunday said the country was “low-keying it” in negotiations with Iran. “We are just watching Iran with its huge inflation and the fact they have no money,” he told Axios.
Houthi attacks
Persisting attacks by the Yemen's Houthi militia on Saudi Arabia's energy infrastructure are also pushing up oil prices. The latest strike was on the Jazan refinery on the kingdom's southern coast near the Red Sea, which produces 400,000 barrels per day.
“With Hormuz flows still constrained and regional attacks continuing, oil prices are likely to retain a sizeable geopolitical premium despite tentative diplomatic progress,” Ms Kim said.
Prices have been volatile since the conflict began on February 28, with Brent reaching as high as $120 a barrel in April over fears of supply disruption in the Strait of Hormuz. While prices eased after a temporary ceasefire agreement between Iran and the US in June, they rose again to hit $100 a barrel after Houthi attacks on Saudi tankers sailing into the Red Sea.
Oil posted a steep weekly decline on Friday as a solution to the conflict seemed more likely at the start of last week. For the week, Brent slid by almost 5 per cent, while WTI retreated about 7.7 per cent.
