Oil prices rise as Iran hardens demands over Strait of Hormuz
Oil prices edged higher on Monday as Iran said the Strait of Hormuz would not fully reopen until the US meets a series of demands, clouding hopes for a quick return to normal shipping through the key energy route.
Brent crude was trading at about $84.24 a barrel. US West Texas Intermediate was at about $78.70, OilPrice.com reported on Monday.
Iran said over the weekend that the passage through the strait would only reopen if Washington met six conditions, including the withdrawal of US forces from the region around Iran, a permanent end to the war, compensation for war damage and the lifting of sanctions. Tehran is also seeking the release of frozen Iranian assets.
The tighter stance has thrown into doubt a broader reopening, even as separate efforts are underway to establish new shipping lanes through the waterway. Iran’s foreign minister said on Sunday that a deal with Oman on the lanes was close to being finalised, but he stressed that the arrangement alone would not reopen Hormuz.
Why the Strait of Hormuz is important for oil markets
The Strait of Hormuz is one of the world’s most important oil chokepoints, connecting the Persian Gulf with the Gulf of Oman and the wider Indian Ocean. Around one-fifth of the world’s oil supplies typically go through the waterway, meaning a prolonged disruption can quickly impact prices, shipping costs and fuel markets globally.
The pressure on regional energy infrastructure is spreading beyond Hormuz, as well. Yemen’s Houthis have said they have attacked Saudi Aramco‘s 400,000-barrel-a-day refinery in Jazan, which had already been closed following an earlier attack in late July. The militant group has also targeted Saudi ports on the Red Sea, which could complicate alternative routes for Saudi crude and fuel exports.
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