Oil prices rose on Monday as peace talks between the US and Iran remained at a stalemate, with efforts to reopen the Strait of Hormuz continuing to stall.
Brent, the benchmark for two-thirds of the world's oil, was up 2.61 per cent at $107.04 a barrel at 8.06am UAE time. West Texas Intermediate, the gauge that tracks US crude, was trading 1.96 per cent higher at $94.22 a barrel.
Both benchmarks had closed more than 2 per cent lower last week.
"Brent is back above $106 a barrel after Friday’s brief relief rally faded," said Daniel Richards, senior economist at Emirates NBD.
"US President Donald Trump rejected Iran’s seven-day plan to reopen the Strait of Hormuz, leaving talks unresolved and restoring a geopolitical premium to crude, but has signalled that he is still open to making a deal."
Mr Trump said at the weekend that he rejected Iran’s latest proposal, but expected negotiators to hold further talks with Tehran this week.
“They want to make a deal, but it is not the deal that I want to make," Mr Trump told Axios in a phone interview on Sunday. "It is what we would have maybe agreed to a year ago. They overplayed their hand.”
Asked whether he was considering resuming strikes against Iran, Mr Trump said: “I am always thinking about it.”
Iranian Foreign Minister Abbas Araghchi said Tehran was prepared for a renewed military confrontation with the US, while remaining open to diplomacy.
“We are ready for diplomacy. We are ready for war at the same time,” Mr Araghchi told NBC’s Meet the Press, adding that Iran had been tested both militarily and diplomatically.
“We stand firm in the face of any new aggression, even if it comes to a doomsday war,” he said.
Oil prices have remained volatile amid talks to end the conflict, as well as reports of Saudi Arabia's East-West pipeline reopening after it was attacked by the Houthi rebels and was shut earlier this month.
Brent remains around $100 per barrel as the market prices in a protracted stalemate between the US and Iran, said Kyle Rodda, senior financial market analyst at Capital.com. Some crude has been getting out of the Gulf, he said.
"As Iran struggles to maintain control of the Strait – potentially a reason why President Trump is less amenable to striking any sort of a deal with the Iranians – the markets are pricing in a less acute supply shock than at the start of the war," he added.
