Trump Rejects Return to Ceasefire Terms as Strait of Hormuz Tensions Rise

Oil prices rose on August 28 as diplomatic efforts to secure an agreement over the Strait of Hormuz hit fresh obstacles. The US President, Donald Trump, had told mediators he was not interested in returning to the terms of a June ceasefire deal with Iran, according to the Wall Street Journal.

This move dampened hopes that an Iran-Oman revenue-sharing arrangement could soon open the door to a wider deal with Washington that would allow more supplies to pass through the waterway. Gulf states had launched a wave of diplomatic activity aimed at easing tensions, which had earlier lifted optimism for a near-term agreement over the strait.

The price of Brent crude for October delivery traded near $90 in thin trading ahead of the contract's expiry, while West Texas Intermediate climbed 1.6% to $84 a barrel. The US was also reported to be in talks with Venezuela over taking a large stake in its oil fields, a move that would extend Washington's influence over the country's post-Maduro government and energy reserves.

Tehran maintained that any navigation agreement would not translate into an immediate reopening of the chokepoint, through which around a fifth of global oil supplies pass. The US had signalled it had no interest in a deal on Tehran's terms, choosing instead to press the Iranian economy through sanctions and a naval blockade of its ports.