Brent crude is trading close to $85 a barrel, having climbed more than 5% over the last three trading sessions. West Texas Intermediate, or the US Crude variant, traded close to $79 a barrel.
Iran’s foreign minister Abbas Araghchi said on Sunday that an agreement with Oman to establish a shipping route through the key waterway was “very close” but ruled out any form of direct talks with the US, accusing the latter of constant violations of the MoU that was signed in June.
However, Araghchi also warned that any form of deal would not immediately re-open the Strait of Hormuz. A similar warning was also given by Saudi Aramco CEO Amin Nasser during the company’s earnings call last week, when he said that even if things return to normal today, taking production and supply back to pre-war levels would take at least 18 months.
An Axios report on Sunday quoted US President Donald Trump saying that he is currently “low-keying” on Iran and signaled patience on that front.
Traders are also reacting to tensions that remain elevated in the region as the Iran-backed Houthis of Yemen claimed another attack on Saudi Aramco’s Jazan refinery, while another tanker operated by Abu Dhabi National Oil Company (ADNOC) was attacked in the Strait of Hormuz over the weekend.
“The bias stays bullish as long as the market is pricing the ‘possibility’ of disruption rather than the certainty of normalization,” said Haris Khurshid, chief investment officer at Chicago-based Karobaar Capital LP. “Until we see actual flows normalize, I think geopolitical risk keeps a floor under crude.”(With Inputs From Agencies)