Oil prices extended their rally on Tuesday, reaching their highest levels in more than a week as diminishing prospects for a U.S.-Iran peace agreement increased uncertainty over when the Strait of Hormuz could fully reopen.
Brent crude futures climbed $1.92, or 2.19%, to $89.64 a barrel by 0805 GMT. U.S. West Texas Intermediate futures advanced $1.91, or 2.33%, to $84.04 a barrel, putting both benchmarks at their highest levels since July 31.
The gains followed a surge of more than 5% for both contracts on Monday. The rally accelerated after President Donald Trump responded to Iran’s conditions for a peace agreement by demanding that Tehran provide compensation for people killed in wars, attacks and protests.
Those demands have added another complication to negotiations aimed at ending the conflict and restoring normal shipping through the Strait of Hormuz.
Trump later said the United States controlled the strait and had cleared Iranian mines from the strategically important energy route.
Hormuz shipping data points to continued supply disruption
Restrictions on shipping remain a central factor supporting crude prices.
“There’s no clear path to a solution and to a full reopening of the strait at this point in time and that’s adding renewed upside pressure on prices,” Saxo Bank head of commodity strategy Ole Hansen said, adding that meaningful supply disruption remains in place.
Only six vessels travelled through the Strait of Hormuz on Monday, according to shipping data, well below the 10-day average of approximately 11 vessels.
Barclays analysts said net exports of crude and refined petroleum products through the waterway averaged 3 million barrels per day during the week ending August 7. That compares with 4.4 million bpd in the preceding week.
The scale of the disruption is particularly significant because around one-fifth of daily global oil and liquefied natural gas supplies passed through the Strait of Hormuz before the Iran conflict began in late February.
Saudi refinery delay adds another regional supply concern
Oil markets are also monitoring developments elsewhere in the region after Saudi Aramco postponed the restart of its 400,000-barrel-per-day Jazan refinery until August 30.
The delay followed two attacks on the facility on Sunday that were claimed by the Houthis.
“The chokehold risk around both the Strait of Hormuz and the Bab el-Mandeb remains highly significant. Even intermittent restrictions or the threat of further incidents keep insurance costs elevated and force longer shipping routes … hence energy flows look likely to stay constrained near term,” said Tim Waterer, chief market analyst at KCM Trade.
The combination of shipping restrictions and threats to regional energy infrastructure is keeping transportation costs and supply risks elevated.
ADNOC continues spot crude tenders
Abu Dhabi National Oil Company, or ADNOC, is meanwhile offering another cargo of spot crude through a tender as the UAE state producer works to move supplies from inside the Strait of Hormuz.
The latest sale represents ADNOC’s eighth such tender since the beginning of June.
With diplomatic negotiations yet to provide a clear route towards reopening the strait and other regional shipping corridors facing disruption risks, crude markets remain highly sensitive to developments affecting Middle Eastern energy flows.
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