Global oil prices continued to escalate after Iran set new conditions for reopening the Strait of Hormuz, dashing hopes for a swift return to stability in energy markets.
Brent, the international benchmark, rose more than 1% in Monday’s session as Tehran stressed that the critical sea lane would not reopen without substantial U.S. concessions. Specifically, October Brent futures reached $83.77 per barrel at 2:30 GMT, up about 16% from before the outbreak of war between the U.S.-Israel alliance and Iran.
Tim Waterer, chief market analyst at Sydney-based KCM Trade, told Al Jazeera: “The lack of concrete progress, coupled with lingering doubts about the practical details of any deal, is keeping a risk premium in prices. Every day that passes without a breakthrough is making traders more cautious.”
Iranian Foreign Minister Abbas Araghchi said on Sunday that although Iran and Oman were close to an agreement on the Strait of Hormuz, the route would not reopen until Washington met certain conditions, including easing sanctions and paying war reparations.
Shipping through the strait—which before the war carried about one-fifth of global oil supply—has nearly collapsed since the conflict began in late February, creating the largest energy disruption in history. Data from ship-tracking platform MarineTraffic showed only 8 to 15 vessels transiting the strait on August 4, 5, and 6, a tiny fraction of the roughly 130 daily passages before the conflict.
Iran has repeatedly asserted its control over shipping in the strait despite international maritime law protecting freedom of navigation, and has threatened to attack commercial vessels attempting to pass through unauthorized routes. Over the weekend, the United Arab Emirates condemned Tehran after an alleged Iranian missile attack on a vessel belonging to the Abu Dhabi National Oil Company.
According to the International Maritime Organization, at least 64 violent incidents and 17 deaths involving commercial ships have occurred in the region since the war began, with most attributed to Iran.
Despite renewed volatility in energy markets, Asian equities rallied in Monday morning trading, with benchmark indexes in Japan, South Korea, and Hong Kong posting significant gains. Japan’s Nikkei 225 rose 2.1%, South Korea’s Kospi gained 0.7%, and Hong Kong’s Hang Seng edged up 0.6%.
Waterer suggested markets remain skeptical about the prospect of a swift, workable deal to reopen the strait. “Even if an agreement is eventually announced, history shows such understandings can be fragile. That lingering reversal risk could limit the downside in oil prices in the event of a diplomatic breakthrough.”
