HOUSTON: Oil prices climbed in choppy trade on Monday, as the US and Iran ratcheted up their rhetoric even as the two countries are engaging in indirect talks that could lead to the de-escalation of hostilities. Brent crude futures settled at USD109.77 a barrel, up 74 cents, or 0.68 percent. US West Texas Intermediate crude futures settled at USD112.40, up 87 cents or 0.78 percent.
For prices to decline to less exorbitant levels, any cessation of attacks would need to come with an agreement to open the crucial Strait of Hormuz, the shipping artery used by one-fifth of the world’s oil and gas supply. Major oil consumers, particularly in Asia, are conserving barrels or cutting consumption in response to the closure of the strait. The US and Iran received a framework from Pakistan to end hostilities, but Iran rejected the idea of immediately reopening the strait after President Donald Trump threatened to rain “hell” on the nation if it did not make a deal by the end of Tuesday.
The strait, which carries oil and petroleum products from Iraq, Saudi Arabia, Qatar, Kuwait and the United Arab Emirates, remains largely closed due to Iranian attacks on shipping after the US-Israel attacks began on February 28. Some vessels, however, including an Omani-operated tanker, a French-owned container ship and a Japanese-owned gas carrier, have passed through the strait since Thursday, shipping data showed, reflecting Iran’s policy to allow passage for vessels from countries it deems friendly.
“The market is trying to realise what to expect going forward. The most important headline this weekend has been that some ships passed through the strait,” said SEB Research analyst Ole Hvalbye.