Oil prices steadied on Tuesday at more than one-week highs amid fading hopes of a deal between the U.S. and Iran to end their war and reopen the Strait of Hormuz, after President Donald Trump demanded compensation for damage the U.S. has incurred.
Brent crude futures were flat at $87.81 a barrel by 0013 GMT, while U.S. West Texas Intermediate crude futures held at $82.20 a barrel.
Both benchmarks rose more than 5% on Monday to their highest since July 31, after Trump responded to Iran’s conditions for a peace deal with his own demands that Iran pay compensation for people killed in wars, attacks and protests, which is likely to complicate efforts to reopen the Strait of Hormuz.
Later in the day he added that the U.S. had control of the strait and had swept the strategic oil waterway for Iranian mines.
“There appears to be a gulf, no pun intended, between the U.S. and Iran over what any agreement would actually look like,” said Tim Waterer, chief market analyst at KCM Trade.
“As a result, some of the optimism that built up last week is being unwound, giving oil prices a decidedly bid tone.”
Meanwhile, Saudi Aramco has postponed the restart of its 400,000-barrel-per-day Jazan refinery to August 30 after the Houthis claimed two attacks on the plant on Sunday.
“The chokehold risk around both the Strait of Hormuz and the Bab el-Mandeb remains highly significant. Even intermittent restrictions or the threat of further incidents keep insurance costs elevated and force longer shipping routes … hence energy flows look likely to stay constrained near term,” Waterer said.
In a note on Monday, analysts at Barclays said that in the week ending August 7, crude oil and refined product net exports through the Strait of Hormuz averaged 3 million barrels per day, down from 4.4 million bpd the previous week.
Elsewhere, Iraq raised the September official selling price (OSP) for Basra Medium crude to Asia by $2.50 to minus $4 a barrel against the average of Oman/Dubai quotes.
