WTI crude climbs to $84.92 as Hormuz shipping stalls

WTI crude rose 0.5% to $84.92 a barrel as U.S.-Iran talks to reopen the Strait of Hormuz stalled and vessel transits through the waterway that carries one-fifth of global oil fell to near zero.

The U.S. Energy Information Administration forecasts reduced transit through the strait will drain global oil inventories in coming months, keeping Brent spot prices near $85 a barrel on average in the third quarter.

Brent crude traded near $88.90 a barrel in early Asian trade Monday, while front-month WTI hovered around $82.60 before climbing to $84.92. U.S. commercial crude inventories rose 17.42 million barrels in the latest week, a build that has capped gains even as geopolitical risk premiums accumulate.

The standoff leaves oil caught between a supply-risk premium and high inventories. If transit stays restricted and begins to hit actual crude flows, prices could test $85 resistance; if shipping recovers, the premium may unwind quickly.

President Donald Trump said he is in no hurry to resolve the U.S.-Iran conflict and threatened to bomb Oman if the country "gets in the way" of U.S. efforts to reach a peace deal with Tehran. Iranian negotiators have held discussions with Omani officials in recent weeks over a provisional arrangement to manage shipping through the strait, but no tangible outcome has emerged.

Washington has ruled out extending the temporary ceasefire that had allowed diplomatic discussions, while Iran has told major powers it will shift to a fully offensive military posture because talks toward a permanent end to the conflict have stalled, a senior Iranian official told Reuters. The U.S. and Israel launched attacks on Iran on Feb. 28; Tehran and Washington agreed to a ceasefire in April and signed a memorandum of understanding in June, but the deal collapsed last month, with both sides exchanging attacks for nearly two weeks before Trump halted the bombardment.

Turkish Foreign Minister Hakan Fidan spoke by phone with his Iranian counterpart Abbas Araghchi on Monday to review the latest developments in negotiations over reopening the strait and maintaining the ceasefire, according to Turkish foreign ministry sources.

Inventories Cap the Rally

The 17.42 million-barrel build in U.S. crude inventories, sharply above the market's expectation of a drawdown, has become the key factor limiting oil price gains. As long as commercial inventories stay elevated, the market will struggle to price a sustained supply shortage, even as geopolitical risk can rapidly lift premiums. A weaker dollar, after soft U.S. inflation and consumption data lowered expectations for further Federal Reserve rate hikes, has provided some support to dollar-denominated crude.

What Happens Next

The core question for traders is whether the drop in strait transits persists. If low transit levels continue, tanker waiting times, insurance costs, and freight rates may rise further, transmitting effects to both the spot and refined-products markets. On the daily chart, $80 a barrel serves as the bull-bear dividing line, with $85 the key overhead resistance; a break above $85 with volume could trigger an upward breakout, while a move below $80 would weaken the bullish structure.

This article is for informational purposes only and does not constitute investment advice.