Oil prices surged nearly 3% on Monday as peace negotiations between the United States and Iran reached a standstill, while shipments through the strategic Strait of Hormuz continued to be restricted, keeping global oil supplies tight.
Brent and WTI See Significant Gains
The Brent crude benchmark rose by $3, or approximately 2.9%, reaching $108.36 per barrel by 0828 GMT, marking its highest level in three weeks. Meanwhile, U.S. West Texas Intermediate (WTI) climbed $2.45, or 2.6%, to $96.85 per barrel. Last week, Brent and WTI recorded gains of nearly 17% and 13% respectively, their biggest weekly increases since the onset of the conflict.
Peace Efforts Stalled
Hope for renewed peace efforts diminished over the weekend when U.S. President Donald Trump stated that Iran could call if it wished to negotiate an end to their two-month war. On the other side, Iranian Foreign Minister Abbas Araqchi traveled between mediators Pakistan and Oman before heading to Russia, with the U.S. and Iran remaining far apart on key issues, including Iran's nuclear ambitions and passage through the Strait of Hormuz.
“The diplomatic stand-off means that every day 10-13 million barrels of oil fail to reach the international market, worsening an already tight oil balance. Therefore, there is only one direction for oil prices to go,” said Tamas Varga, an analyst at PVM Oil Associates.
Strait of Hormuz Blockade
Tehran has largely closed the Strait of Hormuz, while Washington has imposed a blockade on Iran's ports. Traffic through the waterway remained limited, with only one oil products tanker entering the Gulf on Sunday, according to Kpler shipping data.
Goldman Sachs Revises Forecasts
Goldman Sachs raised its oil price forecasts for the fourth quarter, predicting Brent crude at $90 per barrel and WTI at $83 per barrel, citing reduced output from the Middle East. “The economic risks are larger than our crude base case alone suggests because of the net upside risks to oil prices, unusually high refined product prices, product shortages risks, and the unprecedented scale of the shock,” Goldman Sachs analysts led by Daan Struyven said in a note on Sunday.
