Oil prices increased by over 1% on Monday due to a standstill in peace negotiations between the US and Iran, coupled with ongoing restrictions on shipments via the Strait of Hormuz, which are contributing to a tight global oil supply situation.
In early trading, Brent crude futures climbed by $1.35 to reach $106.68 per barrel, while US West Texas Intermediate rose to $95.35 per barrel, marking a 1% increase.
The previous week saw significant gains in both Brent and WTI, with a surge of nearly 17% and 13%, respectively, representing the largest weekly increases since the conflict began.
Hopes for peace talks dwindled over the weekend following US President Donald Trump’s cancellation of a planned visit by envoys Steve Witkoff and Jared Kushner to Islamabad, coinciding with the arrival of Iranian Foreign Minister Abbas Araqchi in Pakistan.
Analyst Priyanka Sachdeva from Phillip Nova noted that President Trump’s recent statements on Truth Social advocating aggressive actions in the Strait of Hormuz have heightened concerns, leading to increased war premiums.
The Strait of Hormuz, mainly controlled by Tehran, has been restricted, while the US has enforced a blockade on Iranian ports. Data from Kpler revealed limited traffic through the strait, with only one oil products tanker entering the Gulf on Sunday.
Goldman Sachs revised its oil price projections for the fourth quarter, forecasting $90 per barrel for Brent crude and $83 for WTI due to reduced output from the Middle East. The analysts at GS highlighted the significant economic risks associated with the current oil price situation and product shortages in a note released on Sunday.
