Oil Prices Rise 3% After Iran Sets Conditions for Hormuz Reopening

Oil prices climbed roughly 3% on Monday after Iran said the United States must lift sanctions, pay reparations and meet other conditions before the Strait of Hormuz can be reopened. Brent crude futures were up $2.48, or 3%, to $86.03 a barrel, while U.S. West Texas Intermediate rose $2.43, or 3.1%, to $80.61.

The benchmarks had fallen more than 7% the previous week on expectations that Iran and Oman were close to an agreement on new shipping lanes through the strait, which had carried about one-fifth of global oil and liquefied natural gas before the conflict in the Middle East began in late February.

Iran said it was nearing a final pact with Oman but reiterated that the United States must also provide compensation, end sanctions and cease military threats before the waterway is reopened. Tehran has indicated it will not resume talks while Washington is deemed to be in breach of an interim deal signed in June, according to Iranian Foreign Minister Abbas Araqchi.

"Crude futures are seeing gains in the early trade as the US/Iran peace deal looks to be delayed along with further strikes from Ukraine hitting Russian refineries and tankers in the Black Sea," said Dennis Kissler, senior vice president of trading at BOK Financial.

"With Iran making the added demands, most traders feel near term, tighter supplies are more probable for longer," Kissler added.

In a separate development, the Iran-aligned Houthi group claimed responsibility for an attack on Saudi Aramco's Jazan refinery, prompting the company to postpone the plant's restart until August 30. The attack followed Saudi Arabia's recent defence pact with Turkey and Pakistan.

Abu Dhabi National Oil Company (ADNOC) reported that 15 of its vessels had been struck while transiting the Strait of Hormuz since the conflict began. Meanwhile, Ukrainian forces continued targeting Russian energy infrastructure, hitting facilities in Tatarstan and the Tyumen region.