LONDON — Oil prices rose Monday as uncertainty over the reopening of the Strait of Hormuz renewed concerns about global energy supplies, with Iran saying the strategic waterway would not fully reopen without major concessions from the United States.
Brent crude, the international benchmark, was around $83.54 a barrel in early trading, while U.S. West Texas Intermediate was about $78.03. Prices had gained earlier before easing as traders assessed the chances of a diplomatic breakthrough.
The Strait of Hormuz, a narrow waterway between Iran and Oman, is one of the world’s most important energy routes. Large volumes of oil and liquefied natural gas pass through it on their way from producers in the Persian Gulf to markets in Asia and elsewhere.
Iranian Foreign Minister Abbas Araqchi said Sunday that Tehran and Oman were close to completing an agreement aimed at establishing new shipping arrangements through the waterway. But he said the agreement alone would not guarantee a full reopening.
Iran is seeking compensation for U.S. military strikes, an end to military threats and sanctions relief, among other conditions, according to reports. Tehran has also indicated that it does not plan to enter direct negotiations with Washington until previous commitments are addressed.
The uncertainty has kept traders cautious because even a temporary disruption in Hormuz can affect the global supply of crude oil and other fuels.
The waterway has remained effectively restricted since military action began earlier this year. The U.S. Energy Information Administration said in June that shipping traffic through the strait had been extremely limited for more than three months, while much of the region’s oil production remained shut in.
The International Energy Agency and other energy analysts have warned that prolonged disruption could put significant pressure on global fuel markets. The effect would not be limited to countries bordering the Persian Gulf because oil is traded internationally and higher crude prices can increase transportation and production costs worldwide.
Asia is particularly exposed because major economies including China, India, Japan and South Korea rely heavily on energy supplies shipped through the region.
The latest market movement also reflects concerns beyond the Strait itself. Iran-aligned Houthi forces have claimed attacks on Saudi energy infrastructure, while the United Arab Emirates’ ADNOC has reported attacks on vessels linked to its operations since the conflict began. Such incidents increase fears that disruptions could spread to other parts of the regional energy supply chain.
For oil-producing countries, higher prices can increase export earnings. But for major importers, they can raise fuel and transportation costs and make it harder for central banks to control inflation.
That is particularly important for developing economies, where households often spend a larger share of their income on transport, food and energy.
Nigeria, Africa’s largest oil producer, could benefit from stronger crude prices through higher export earnings and government revenue. But higher international prices can also increase domestic fuel costs and add pressure to consumers if global energy markets remain unstable.
The Strait of Hormuz has long been viewed as a critical chokepoint for the global economy. Previous Middle East conflicts and tensions involving Iran have repeatedly caused oil traders to price in the possibility of supply disruptions, even when actual exports were not significantly affected.
The immediate focus for traders is therefore on diplomatic developments between Iran, Oman and the United States, as well as the security of commercial vessels attempting to move through the waterway.
The Strait of Hormuz has been a major focus of global energy security for decades because of the enormous volume of oil and gas that normally passes through the waterway.
Past tensions involving Iran, including threats to disrupt shipping, have repeatedly caused sharp movements in oil markets. The current crisis is particularly significant because commercial traffic has already been severely restricted for months.
The U.S. Energy Information Administration reported in June that the disruption had caused global oil inventories to fall as supplies were used to meet demand.
