Oil prices rose on Tuesday to touch the $90 a barrel mark as hopes weakened for a US-Iran deal and the reopening of the Strait of Hormuz after US President Donald Trump demanded compensation from Tehran.
Brent, the benchmark for two thirds of the world’s oil, was up 2.6 per cent to $90 a barrel at 1.16pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was trading 2.98 per cent higher at $84.58 a barrel.
Prices rose to their highest level in more than a week after Mr Trump on Monday demanded compensation from Iran, saying he had instructed his representatives to include this stipulation “firmly” in any future talks.
“I am likewise demanding compensation from Iran, for all of the people that they have killed and gravely wounded with their roadside bombs and many conflicts, for which they are famous, as led initially by General [Qassem] Soleimani, including the families of those killed on the USS Cole, and thousands of others killed in combat,” the US President said on Truth Social.
He added that the Iranian leadership should also compensate the families of people killed in protests, “not to mention the 52,000 that have been killed in the last five months”.
Iran has set six new conditions to reopen Hormuz, including the lifting of a maritime blockade on Iranian crude and the withdrawal of US naval and air forces from around Iran.
Oil prices extended “a four-day rally as tougher US and Iranian demands reduced prospects for a near-term agreement to restore normal shipping through the Strait of Hormuz”, said Soojin Kim, research analyst at MUFG.
“With diplomatic positions hardening, global inventories already tight and alternative exports routes facing security risks, the prolonged disruption to Hormuz is likely to keep a sizeable geopolitical premium embedded in oil prices.”
Traffic through Hormuz “remains severely constrained” at around five vessels per day, keeping a significant portion of global energy flows at risk, she said. “Supply concerns are also spreading to the Red Sea, where Houthi attacks have disrupted shipping and reportedly delayed the restart of Saudi Arabia’s Jazan refinery.”
