Oil steadied on Tuesday at more than one-week highs as hopes faded for a deal between the United States and Iran to end their war and reopen the Strait of Hormuz (Geo News).
Brent crude futures were flat at $87.81 a barrel by 0013 GMT, with US West Texas Intermediate at $82.20. Both benchmarks rose more than 5 per cent on Monday to their highest since July 31.
The trigger was an exchange of demands. Iran had set conditions for reopening the strait, including compensation for war damage, an end to sanctions and the release of frozen assets. President Donald Trump responded with his own demand that Iran pay compensation for people killed in wars, attacks and protests. He later said the United States had control of the strait and had swept it for Iranian mines.
“There appears to be a gulf, no pun intended, between the US and Iran over what any agreement would actually look like,” said Tim Waterer, chief market analyst at KCM Trade. “As a result, some of the optimism that built up last week is being unwound.”
The flow data show the practical effect. Barclays said crude and refined product net exports through Hormuz averaged 3 million barrels a day in the week ending August 7, down from 4.4 million the previous week — a fall of nearly a third in seven days.
Attacks are also hitting refining capacity ashore. Saudi Aramco has postponed the restart of its 400,000-barrel-a-day Jazan refinery to August 30 after the Houthis claimed two attacks on the plant on Sunday.
“The chokehold risk around both the Strait of Hormuz and the Bab el-Mandeb remains highly significant,” Waterer said. “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.”
Iraq raised the September official selling price for Basra Medium crude to Asia by $2.50, to minus $4 a barrel against the average of Oman and Dubai quotes.
For Pakistan, which imports around 90 per cent of its energy and buys most of its crude and LNG through the Gulf, the direction of travel is the problem rather than any single day’s price. Domestic fuel rates were left unchanged on Tuesday, at Rs327.62 for petrol and Rs380.86 for diesel — but the pricing mechanism averages the previous seven days, so this week’s rebound reaches the pump next week.
