Global oil prices are escalating as hopes for reopening the Strait of Hormuz continue to fade. The rally follows Tehran's demands to the U.S., including an end to military threats, lifting sanctions, and compensation in exchange for resuming shipping through the strategic waterway.
In Monday's trading session, Brent crude rose more than $2 to reach $84.64 per barrel, a 3.3% daily increase. U.S. West Texas Intermediate (WTI) crude also climbed 3.1% to $80.63 per barrel.
“Although the strait remains largely closed, oil is trading around $80–85 per barrel, reflecting expectations of a resolution in the near future,” analysts at SEB Research said in a note to investors.
The development follows a week of slight declines when both major benchmarks lost 7% amid hopes that the two sides could reach a deal to reopen the strait. U.S. consumers have seen some relief at the pump.
According to the American Automobile Association (AAA), the average U.S. gasoline price fell 9 cents over the past week to $4.00 per gallon (3.78 liters), down from $4.09 the previous week.
However, Patrick De Haan, head of petroleum analysis at GasBuddy, warned that upward price pressure could return at any time if the strait remains closed.
“With the strait still closed, fuel price pressure could return quickly. If the situation does not improve, the national average gasoline price could hit record highs by the end of the year,” De Haan said. He advised consumers to take advantage of the current price dip but to monitor developments in Hormuz closely in the coming days.
On U.S. stock markets, shares of oil companies also rose as the new trading week began. ExxonMobil shares gained 2.9% in midday trading, Chevron rose 3.1%, BP climbed 2.1%, and Shell added 1.2%. ConocoPhillips also rose 2.7% since the market opened.
