Oil prices maintained one-week highs on Tuesday as prospects for a US-Iran peace deal stalled following President Donald Trump’s demand for compensation regarding past conflict-related damages.
Market Stability Amid Geopolitical Tension
Brent crude futures remained stable at $87.81 per barrel as of 0013 GMT, while U.S. West Texas Intermediate (WTI) crude held steady at $82.20 per barrel. This stability follows a significant 5% rally on Monday, which pushed both benchmarks to their highest levels since July 31.
The market reaction stems from President Trump’s response to Iran’s peace conditions. By insisting that Iran pay compensation for lives lost in various wars, attacks, and protests, the administration has effectively complicated negotiations to reopen the vital Strait of Hormuz. Furthermore, Trump asserted that the U.S. maintains control over the waterway and has already cleared it of Iranian mines.
Analysts Weigh In on Market Sentiment
“There appears to be a gulf, no pun intended, between the U.S. and Iran over what any agreement would actually look like,” noted 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.”
Supply Chain Disruptions and Refinery Delays
Geopolitical risks extend beyond diplomatic disputes. Saudi Aramco has pushed back the restart of its 400,000-barrel-per-day Jazan refinery to August 30, following claims by Houthi forces of two separate attacks on the facility this past Sunday.
“The chokehold risk around both the Strait of Hormuz and the Bab el-Mandeb remains highly significant,” Waterer added. “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 in the near term.”
Data Highlights Export Declines
The impact on global energy logistics is already visible. According to a Monday report from Barclays, crude oil and refined product net exports through the Strait of Hormuz averaged 3 million barrels per day (bpd) for the week ending August 7, a sharp decline from the 4.4 million bpd recorded the previous week.
In other regional developments, Iraq has adjusted its pricing strategy, increasing the September official selling price (OSP) for Basra Medium crude bound for Asia by $2.50. The new price is set at minus $4 per barrel against the average of Oman/Dubai quotes.