Oil Prices Rise as Hormuz Reopening Prospects Weighed by Investors
Oil prices rose on Thursday after investors weighed the prospects of progress in reopening the Strait of Hormuz and broader Middle East supply risks. Brent crude futures were up 51 cents, or 0.58 per cent, to $88.35 a barrel at 1005 GMT, while West Texas Intermediate crude futures gained 18 cents, or 0.22 per cent, to $82.41.
The Strait of Hormuz has been closed for nearly six months due to the U.S.-Israeli conflict with Iran, which has effectively shut down the vital waterway for Gulf energy exports. The strait handles about one-fifth of global daily oil and liquefied natural gas supplies.
Qatar's prime minister will head to Iran on Thursday to relaunch diplomatic talks aimed at ending the conflict. A senior Iranian source said that Iran and Oman are working on finalising details of an agreement to control the strait, after Iran's Revolutionary Guards announced that the two countries had agreed how to share the waterway.
However, experts warn that optimism around a deal may prove premature, and negotiations may stall or break down again. This would quickly re-inject risk premium into prices, according to KCM chief market analyst Tim Waterer.