Oil prices rose on Monday on a lack of progress in diplomatic efforts to resolve the Iran war, though the absence of major supply outages limited gains.
Brent crude futures were up 43 US cents, or 0.5 per cent, at US$88.95 a barrel by 9:13 a.m. TE after hitting a session high of US$89.68. U.S. West Texas Intermediate crude futures rose 25 US cents, or 0.3 per cent, to US$82.65 a barrel.
Both contracts gained more than 5% last week following attacks on tankers operated by the Abu Dhabi National Oil Company in the Strait of Hormuz and on a Saudi Aramco refinery.
But Bjarne Schieldrop at SEB Research said that prices were unlikely to move substantially higher unless there was a halt in the current flow of crude out through the Strait of Hormuz at night and/or a closure of the Bab el-Mandeb Strait.
For now, prices were trading close to UDS$90 as traders weigh the risk of deeper disruption and shortages against the possibility of a resolution where the Strait of Hormuz is reopened and oil prices fall sharply, Schieldrop said.
Over the weekend, Iranian Foreign Minister Abbas Araqchi said Iran had not decided to resume talks with the United States, while U.S. President Donald Trump urged Americans to accept slightly higher gasoline prices while the conflict continues.
Iran’s Foreign Ministry spokesperson Esmaeil Baghaei said talks with Oman were continuing and were taking a long time due to the complexity of the subject, the involvement of multiple actors and countries seeking to undermine the process.
“Shipping through the Strait of Hormuz remains restricted, and negotiations have reached a stalemate, both of which limit the potential for further decline,” said Frank Walbaum, market analyst at trading platform Naga.com.
“In the absence of new catalysts, oil prices could continue to consolidate around current levels.”
Shipping through the Strait of Hormuz slowed over the weekend, data showed on Monday, following attacks on tankers. Five commodity vessels transited the strait on Saturday, with none registered for Sunday, ship-tracking data from Kpler showed, versus 31 for the prior weekend.
Before U.S.-Israeli attacks on Iran began in late February, the strait handled about one-fifth of global oil and liquefied natural gas supplies.
Meanwhile, ADNOC sold at least 14 million barrels of spot crude to Asian refiners at premiums in its latest tender, trade sources said on Monday.
Saudi Aramco is offering crude oil outside of the Strait of Hormuz to some Asian refiners, two sources with knowledge of the matter said on Monday.
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