(LONDON, UK) – Global oil prices steadied near a more than one week high on Tuesday as hopes faded for a swift agreement between the United States and Iran to end hostilities and reopen the Strait of Hormuz to full commercial shipping. At current rates, Brent crude at 87.62 dollars per barrel equates to approximately 68.55 British pounds and 79.60 euros per barrel.
Brent crude futures fell by 10 cents, or 0.11 percent, to 87.62 dollars per barrel. US West Texas Intermediate crude futures slipped by 5 cents, or 0.06 percent, to 82.08 dollars per barrel. The WTI price is equivalent to roughly 64.21 British pounds and 74.57 euros per barrel.
Both benchmarks had surged more than 5 percent on Monday to their highest levels since 31 July. The jump came after President Donald Trump responded to Iranian conditions for a peace deal with his own demands that Iran pay compensation for American losses in the war, attacks and protests, a move likely to complicate efforts to open the Strait of Hormuz. Later on Monday, Trump added that the United States controls the strait and had cleared the strategic oil waterway of Iranian mines.
Tim Waterer, chief market analyst at KCM Trade, said there appeared to be a gulf between the United States and Iran over what any agreement should actually look like.
Saudi Aramco separately postponed the restart of its 400,000 barrel per day Jizan refinery until 30 August, after Houthi forces claimed two attacks on the facility on Sunday.
Waterer noted that the risk of a blockade of the Strait of Hormuz and the Bab el Mandeb strait remains very significant. Even intermittent restrictions or the threat of further incidents keep insurance costs elevated and force the use of longer shipping routes, meaning energy flows are likely to remain constrained in the near term.
Analysts at Barclays said in a note on Monday that net exports of crude oil and refined products through the Strait of Hormuz averaged 3 million barrels per day in the week ending 7 August. That compared with 4.4 million barrels per day the previous week, a drop of roughly 32 percent.
The Abu Dhabi National Oil Company is offering spot crude in a tender, the eighth such offering since the start of June, as the state oil company of the United Arab Emirates works to move oil away from the Strait of Hormuz.
Separately, the National Security and Foreign Policy Committee of the Iranian parliament has approved its own draft law on the management of the strategic waterway, against the backdrop of talks with Oman on shipping through the Strait of Hormuz.