Oil Prices Surge as Hormuz Diplomacy Hits Stumbling Blocks
Oil prices rose on Thursday as diplomatic efforts to secure an agreement over the Strait of Hormuz hit stumbling blocks, casting doubt on a sustainable increase in energy flows through the waterway.
The West Texas Intermediate price settled near $84 a barrel, while Brent for October delivery was near $90 amid thin trading ahead of its expiry. The November contract closed under $89.
Prices gained after US President Donald Trump told mediators he is uninterested in returning to the terms of a June ceasefire deal with Iran, according to The Wall Street Journal.
This dashed hopes that an Iran-Oman revenue-sharing agreement on Hormuz might soon pave the way for a broader deal with Washington, allowing more supplies to transit the waterway. Qatar's prime minister met with Iran's lead negotiator Mohammad Bagher Ghalibaf to discuss ways to create 'appropriate conditions' for the resumption of talks with the US.
However, Tehran has repeatedly said an agreement on navigation would not equate to an immediate re-opening of the chokepoint for about a fifth of the world's oil supplies. The US has signalled it is not interested in a deal set on Tehran's terms, instead opting to apply pressure on the Islamic Republic's economy through sanctions and a naval blockade.
Saul Kavonic, senior energy analyst at MST Marquee, said: 'There have been many false starts to ceasefires already, so the market is hesitant to move prematurely.'