Key Takeaways:
Iran's demand for a U.S. military withdrawal and an end to sanctions is keeping a geopolitical premium in crude as Brent holds above $83 a barrel.
Brent crude held above $83 a barrel Monday as Iran's sweeping conditions for reopening the Strait of Hormuz dimmed prospects for restoring flows through a waterway that carries one-fifth of the world's oil.
"Tensions remain high in the Middle East," ANZ Research analysts said in a report, noting Abu Dhabi National Oil Co. said three of its tankers were attacked while transiting the strait last week.
Front-month Brent gained 0.3% to $83.80 a barrel, while West Texas Intermediate rose 0.1% to $78.29, ICE data showed. Gold held above $4,300 an ounce, up 0.2%, while Asia-Pacific equities mostly rose after a weaker-than-expected U.S. payrolls report tempered Federal Reserve rate-hike bets.
The standoff leaves roughly one-fifth of global seaborne crude at risk. Mohammad Bagher Zolghadr, secretary of Iran's Supreme National Security Council, said the waterway will remain closed until Washington "corrects its behavior," a list that includes lifting sanctions, ending the naval blockade, withdrawing U.S. forces and releasing frozen Iranian assets.
The demands came even as Iran and Oman moved closer to an agreement on a temporary shipping route through the strait. Foreign Minister Abbas Araghchi said Saturday the two countries were "very close" to completing negotiations on the route, an interim arrangement while work continues on a new permanent Traffic Separation Scheme. But he said reopening remained subject to separate conditions, including U.S. compensation for what Tehran calls violations of the Islamabad memorandum of understanding.
The Islamic Revolutionary Guards Corps reinforced that distinction, with spokesman Hossein Mohebi saying the Iran-Oman talks and a decision to reopen the strait were separate issues. "Whenever America accepts Iran's conditions, the Strait of Hormuz will certainly reopen," he said.
From Washington, Vice President JD Vance said Iran had told the United States it had no plans to impose tolls in the strait and that Tehran and Gulf states were discussing demining and safe-passage arrangements. "We don't trust, we verify," Vance said in a Fox News interview Saturday.
The reopening dispute is the latest twist in a conflict that began with U.S.-Israeli strikes on Feb. 28. A June cease-fire collapsed in July, and the naval blockade of Iranian ports was reinstated July 14 after the interim deal unraveled. Kpler data showed only six vessels passed through the strait Monday, all using the route through Iranian waters.
For markets, the stakes are concentrated in energy prices. Iran's firm tone is helping keep a premium in crude despite easing risks of a military confrontation, said Ahmad Assir, research strategist at Pepperstone. The last time the strait was effectively closed, after the 2019 tanker attacks, Brent spiked more than 20 percent within weeks before spare OPEC capacity and Washington's pressure campaign capped the rally.
The dollar found modest support during the Asian session, though uncertainty around the strait is keeping risk sentiment cautious, said Samara Hammoud, currency strategist at Commonwealth Bank of Australia. Attention now shifts to U.S. inflation data due this week, where a softer reading "would soothe hawkish Fed expectations and keep the market mood in a sweet spot," said Ipek Ozkardeskaya, senior analyst at Swissquote.
If the strait stays closed, oil prices could spike sharply given the concentration of supply at risk; if Iran and Oman finalize a shipping route and Washington meets enough conditions, Brent could shed its geopolitical premium quickly. Either path leaves crude sensitive to headlines from the Gulf.
This article is for informational purposes only and does not constitute investment advice.
