Oil Prices Rise Over 1% As Strait Of Hormuz Reopening Remains Uncertain

Oil prices rose more than 1% on Monday as uncertainty persisted over the reopening of the Strait of Hormuz, a crucial route for global energy shipments. At around 7:30 am IST, Brent crude was up 1.32% at $84.65 a barrel, while West Texas Intermediate (WTI) crude gained 1.04% to $78.99.

The gains followed a sharp decline last week, when both benchmarks lost more than 7% amid expectations that Iran and Oman were nearing an agreement that could help restore shipping through the strategic waterway. Before the conflict, the Strait of Hormuz carried about one-fifth of the world's oil.

Iran-Oman shipping agreement remains uncertain

Iranian Foreign Minister Abbas Araqchi said on Sunday that an agreement with Oman had reached its "final stages". According to Iran's Mehr news agency, the proposed arrangement would create new shipping routes through the Strait of Hormuz.

However, the routes would become operational only after the United States meets conditions set by Tehran and the waterway is reopened. Iran has said its demands include compensation, the removal of sanctions and an end to US military threats.

Direct talks between Iran and the US have not taken place. Araqchi said Tehran would not negotiate directly with Washington while the US was violating an interim agreement signed in June. Instead, communications between the two sides are being conducted through intermediaries, he said.

The uncertainty surrounding the Strait of Hormuz has added to concerns about the security of oil shipments from the region. The waterway is one of the world's most important energy chokepoints, making developments surrounding its reopening closely watched by oil markets.

Houthi attacks add to regional oil supply concerns

Concerns over regional energy security have also been heightened by attacks involving Saudi Arabia. Iran-aligned Houthi rebels said on Sunday that they had targeted Saudi Aramco's Jazan refinery.

Saudi Arabia's Energy Ministry confirmed that a fire had broken out at the facility. The ministry said the fire had been extinguished, no injuries were reported and authorities were handling the incident. It did not disclose what caused the blaze.

The Houthis have also carried out attacks on shipping in the Red Sea and the Gulf of Aden, another important maritime chokepoint. These incidents have occurred alongside Iranian attacks on vessels in the Strait of Hormuz.