By Goran_tek-en, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=115671987
WASHINGTON — Oil prices jumped about five per cent Monday as hopes for a reopening of the Strait of Hormuz faded amid renewed tensions between Iran and the United States and growing concerns about global supplies.
Brent crude futures settled up $4.17 US, or 4.99 per cent, at $87.72 US a barrel, while West Texas Intermediate gained $3.95 US, or 5.05 per cent, to close at $82.13 US.
The gains were the largest percentage increases for both benchmarks since July 29 and followed declines of more than seven per cent last week.
Those losses were driven largely by expectations Iran and Oman were nearing an agreement aimed at reopening the Strait of Hormuz, which carried about one-fifth of the world’s oil and liquefied natural gas before the Middle East conflict began in February.
Iran says it is nearing an agreement with Oman on new shipping arrangements through the strategic waterway, but has maintained a full reopening would depend on additional conditions being met.
Those include an end to U.S. sanctions and military threats, along with compensation for damage caused during the conflict. The United States is also seeking compensation from Iran.
Iran and the United States are not currently engaged in direct negotiations, with Tehran maintaining Washington violated an interim agreement reached in June.
Shipping traffic through Hormuz has continued to decline amid the uncertainty. Data from shipping analytics firm Kpler showed confirmed crossings fell from 15 Friday to 11 Saturday and six Sunday.
Additional supply concerns are also supporting oil prices.
Iran-backed Houthi forces have claimed attacks on Saudi Arabian energy infrastructure, including the Saudi Aramco refinery at Jazan. The restart of the 400,000-barrel-per-day refinery has reportedly been delayed until Aug. 30 following recent attacks.
The United Arab Emirates’ state-owned ADNOC has also reported 15 of its vessels have been attacked while travelling through the Strait of Hormuz since the conflict began.
Elsewhere, Ukrainian forces have continued targeting Russian energy infrastructure, including oil refining and petrochemical facilities.
Some pressure on Black Sea supplies eased after Ukraine agreed not to target certain non-Russian oil tankers and infrastructure important to Kazakhstan’s crude exports.
U.S. emergency oil reserves have meanwhile fallen to their lowest level in more than four decades.
The Strategic Petroleum Reserve declined by about 6.1 million barrels last week to 298.7 million barrels, its lowest level since January 1983.
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