The Daily Journal.- Oil prices started the week higher as the market grew increasingly skeptical about a potential agreement in the Middle East to reopen the Strait of Hormuz. North Sea Brent crude for October delivery rose 1.29% to $83.55 per barrel.
Its U.S. counterpart, West Texas Intermediate (WTI) crude for September delivery, gained 1.15% to $78.18 per barrel.
“The optimism prevailing in the oil market over a reopening of the Strait of Hormuz may prove premature,” said Barbara Lambrecht, an analyst at Commerzbank.
Oil prices had fallen at the beginning of the week as the market bet on a swift agreement to reopen this crucial artery for hydrocarbon trade.
U.S. President Donald Trump said Monday that the passage could reopen “soon.”
However, “there are indications that Iran wants to prohibit U.S. and Israeli vessels from crossing” the strait, ING analysts said. Washington would find such a condition unacceptable.
“Iran has also reportedly launched new attacks against ‘hostile targets’ in the Strait of Hormuz,” Lambrecht said.
Last Friday, Houthi rebels in Yemen also claimed responsibility for attacks in an oil-rich province, further fueling investor concerns.
“Ultimately, everything remains uncertain,” Lambrecht said.
Arne Lohmann Rasmussen of Global Risk Management described it as a “nervous market heading into the weekend.”
Meanwhile, Chinese crude imports “remain more than 3 million barrels per day below the level recorded before the war,” despite a slight increase in July, the analyst noted.
Weak crude purchases from China continue to play a major role in limiting the rise in oil prices.
However, Rasmussen said this also means there is little chance “that China will increase its exports of refined products” in the immediate future. This situation heightens the risk of elevated prices for petroleum products such as gasoline.
With information from Fox News.
