Oil prices increased for the fifth day in a row amid worries about the US-Iran agreement
Oil prices edged higher on Tuesday, marking a third consecutive day of gains, as Iran announced a shift to a more aggressive stance and stated that the Strait of Hormuz would stay closed. Meanwhile, Washington ruled out extending a ceasefire.
Brent crude futures rose by 15 cents, closing at $91.02 per barrel. U.S. West Texas Intermediate crude futures climbed 44 cents, settling at $84.94 per barrel. Earlier in the session, both contracts hit their highest levels in three weeks.
Efforts towards peace talks and the resumption of oil tanker traffic through the strategic Strait of Hormuz have stalled, posing risks of prolonging the conflict initiated by U.S. and Israeli attacks on Iran on February 28.
According to comments in state media on Tuesday, Iran plans to maintain the strait's closure until the U.S. fulfills the conditions of an interim deal made in June, stated top Iranian negotiator Mohammad Baqer Qalibaf.
Former President Trump, who had previously dismissed the deal as "over," mentioned on Tuesday that no discussions were occurring or planned between Washington and Tehran, yet claimed the Strait of Hormuz remained open. His remarks had little impact on the market.
Tracy Shuchart, a senior economist at NinjaTrader, remarked, "Today's market response shows headline fatigue. Trump's comments about a lack of talks don't alter the physical realities, as no substantial talks were happening anyway, and the situation hasn't changed materially for weeks."
Qalibaf’s remarks followed a senior Iranian official's statement to Reuters on Monday, indicating that Iran would adopt a "fully offensive" military strategy due to delays in reaching a permanent resolution to the war.
Oil prices rose today
Mohit Kumar, an economist at Jefferies, noted that neither Iran nor the U.S. has reached a point where compromise seems viable. "As a result, we anticipate further challenges in the near term and upward pressure on oil prices," he added.
Despite the strait's closure, some oil manages to transit Hormuz in limited numbers. Saudi Aramco has restarted oil loadings within the strait and is offering cargo transfers via ship-to-ship operations off Fujairah in the UAE.
"It seems Iran can fully stop oil flow through Hormuz whenever they choose," noted SEB analyst Bjarne Schieldrop.
Iran is also negotiating with Oman on managing the Strait of Hormuz and reportedly nearing an agreement. However, Trump reacted to these negotiations with a threat to bomb Oman, despite its role as a long-time U.S. security partner.
In other regional developments, Yemen's Houthis launched missiles targeting what they claimed was a Saudi military ship and four escorts in the Red Sea, according to their military spokesperson Yahya Saree on Telegram.
Later, the United Arab Emirates issued an alert on X about detecting a missile threat through its air defense systems, but subsequently communicated via phone alert that it was safe to resume normal activities.
This morning, crude oil prices increased as investors evaluated the recent events in the Middle East
Meanwhile, in Russia, four sources informed Reuters that Kazakhstan’s crude exports are being redirected from the Baltic port of Ust-Luga to the Black Sea port of Novorossiysk. This strategy frees up capacity for increased Russian oil exports from the Baltic region amid elevated security risks in the Black Sea. The shift enables Russia to replace Kazakh barrels at Ust-Luga with its own exports while Ukrainian drone strikes complicate securing tankers for Black Sea shipments.
Oil prices rose
Key Focus: Investors are closely watching the ongoing dynamics between the United States and IranToday, the Energy Information Administration (EIA) is set to release data on U.S. crude oil inventories at 18:30 UAE time. Expectations indicate a decrease in U.S. crude oil stockpiles by 500,000 barrels over the past week. This follows a previous increase of 2.479 million barrels, which had brought the total to 407 million barrels for the week ending July 31. Analysts also predict a reduction of 1.58 million barrels in gasoline inventories and a 1.6-million-barrel decline in distillate stocks for this period.