Oil Prices Soar on US-Iran Compensation Demands
Oil prices surged on Monday after Iran and the US traded demands for compensation, dimming hopes for a deal to reopen the Strait of Hormuz. Brent crude futures settled up $4.17, or 4.99%, at $87.72 a barrel, while U.S. West Texas Intermediate crude futures closed $3.95, or 5.05%, at $82.13.
The percentage gains were the highest since July 29 on both contracts. Both benchmarks fell more than 7% last week on hopes that Iran and Oman were close to reaching a deal that would result in a reopening of the strait, which carried a fifth of the world's oil and liquefied natural gas before the start of the Middle East conflict in late February.
Iran said it was nearing a final pact with Oman to define new shipping lanes through the strait but repeated that the US must meet other conditions, including compensation and an end to sanctions and military threats before the strategic waterway is reopened. Iranian Foreign Minister Abbas Araqchi said on Sunday that Tehran will not start talks while Washington is in breach of an interim deal signed in June.
Dennis Kissler, senior vice president of trading at BOK Financial, noted that 'crude futures (are) seeing gains in the early trade as the US/Iran peace deal looks to be delayed along with further strikes from Ukraine hitting Russian refineries and tankers in the Black Sea.' He added that 'with Iran making the added demands, most traders feel near term, tighter supplies are more probable for longer.'