Oil prices surged 3% on Monday after Iran demanded that the U.S. lift sanctions, pay reparations, and fulfill additional conditions before reopening the Strait of Hormuz. By 10:44 a.m. EDT, Brent crude futures rose by $2.48 to $86.03 a barrel, while U.S. West Texas Intermediate crude increased by $2.43 to $80.61. Last week, both benchmarks had dropped over 7% due to optimism surrounding a potential deal between Iran and Oman to reopen the crucial waterway, which previously facilitated a fifth of the world’s oil and LNG.
Iran is reportedly close to finalizing a shipping agreement with Oman but insists that the U.S. must meet its demands first. Iranian Foreign Minister Abbas Araqchi stated that talks with the U.S. won’t commence until Washington adheres to an interim deal from June. Dennis Kissler from BOK Financial noted that the delay in a U.S.-Iran peace deal, coupled with ongoing strikes on Russian energy facilities by Ukraine, suggests tighter oil supplies in the near term.
Additionally, the Iran-aligned Houthis targeted Saudi Aramco’s Jazan refinery, leading to a postponement of its restart. The situation escalated following Saudi Arabia’s recent defense pact with Turkey and Pakistan amid rising regional tensions. Meanwhile, Ukraine continues to strike Russian energy infrastructure, further complicating global oil supply dynamics.
