Hormuz Traffic Conundrum Fuels Oil Price Volatility

Oil prices rose on Monday as tensions between the US and Iran continued to simmer. The breakdown in diplomatic talks and a sharp slowdown in tanker traffic through the Strait of Hormuz have restored a geopolitical premium across crude markets.

Brent crude futures climbed as much as 1% to $89.40 a barrel, while West Texas Intermediate rose to $82.83. Both benchmarks gained more than 5% last week after attacks on tankers and Saudi energy infrastructure revived concerns that supply disruptions could persist even as global demand weakens.

The immediate driver remains the Strait of Hormuz, where shipping activity has slowed sharply with only five commodity vessels crossing the strait on Saturday and none recorded on Sunday. Iran's Foreign Minister Abbas Araqchi said Tehran has not decided to resume negotiations with the US, while the UAE accused Iran of targeting another ADNOC-operated tanker.

The market response remains measured rather than disorderly, according to AMP chief economist Shane Oliver, who expects crude to stay broadly within a $70-$100 range while the Hormuz impasse persists. Constrained Middle East exports put a floor under prices, but weaker demand limits the upside.