Oil prices held near their highest level in more than a week on Tuesday as hopes for a quick US-Iran peace deal weakened, raising fresh concerns over the reopening of the Strait of Hormuz.
Brent crude was little changed at $87.81 a barrel by 0013 GMT, while US West Texas Intermediate crude stood at $82.20 a barrel.
Both benchmarks jumped more than 5 percent on Monday, reaching their highest levels since July 31. The rally came after US President Donald Trump responded to Iran’s conditions for ending the conflict with demands for compensation over deaths linked to wars, attacks and protests.
The demands have added another hurdle to talks and raised doubts over how soon shipping through the strategic waterway can return to normal.
Trump later said the US had control of the Strait of Hormuz and had cleared parts of the key oil route of Iranian mines. The comments added to market concerns about the security of one of the world’s most important energy corridors.
“There appears to be a gulf between the US and Iran over what any agreement would actually look like,” said Tim Waterer, chief market analyst at KCM Trade.
He said the loss of optimism around a possible deal was supporting oil prices as traders reassessed the outlook for supplies.
Supply concerns were also heightened by Saudi Aramco’s decision to delay the restart of its Jazan refinery until August 30. The facility can process around 400,000 barrels of crude per day. The delay follows claims by Yemen’s Houthis that they attacked the refinery twice on Sunday.
The Strait of Hormuz is not the only shipping route facing pressure. The Bab el-Mandeb waterway also remains exposed to security risks, forcing some vessels to take longer routes and pushing up insurance costs.
Barclays said crude oil and refined product exports through the Strait of Hormuz averaged around 3 million barrels per day in the week ended August 7. That was down from 4.4 million barrels per day a week earlier.
Meanwhile, Iraq raised its September official selling price for Basra Medium crude to Asian buyers by $2.50, setting it at a discount of $4 a barrel to the Oman/Dubai average.
With tensions still high around key shipping routes, traders are watching for any development that could either ease or further disrupt global oil supplies.