(Bloomberg) — Oil rose after a report said US President Donald Trump has told mediators he’s uninterested in returning to terms of a June ceasefire deal signed with Iran, casting doubt on a sustainable increase in energy flows through the Strait of Hormuz.
West Texas Intermediate rose about 1.7% to trade near $84 a barrel and Brent, the global benchmark was trading up about 2.1%. Trump has repeatedly told mediators he has no interest in returning to the terms of the memorandum of understanding, the Wall Street Journal reported. That dashed hopes that an Iran-Oman revenue-sharing agreement on Hormuz might soon pave the way for a broader deal with Washington, allowing more supplies to transit the waterway.
Qatari officials met with Iran’s Foreign Minister Abbas Araghchi to discuss the proposed interim framework on Hormuz’s status, which includes the establishment of a temporary route in the strait, the country’s foreign ministry said Thursday in a social media post.
Still, Tehran has repeatedly said an agreement on navigation would not equate to an immediate re-opening of the chokepoint for about a fifth of the world’s oil supplies. The strait is at the center of the standoff between Iran and the US.
White House Press Secretary Karoline Leavitt earlier told reporters on Thursday morning that the US isn’t negotiating with Iran and that the country’s naval blockade on Iranian ports will remain in effect.
“There have been many false starts to ceasefires already, so the market is hesitant to move prematurely,” said Saul Kavonic, senior energy analyst at MST Marquee.
Oil is up more than 40% this year after the six-month conflict launched by the US and Israel in late February crimped flows from the Persian Gulf. Still, talks between Iran and Oman, along with US economic measures against Tehran that proved less harsh than anticipated, have helped ease prices this week.
Meanwhile, crude appears to be flowing from the Persian Gulf. About 6 million to 8 million barrels a day of crude are now being shipped through the world’s key oil chokepoint, according to estimates from oil traders involved in and monitoring cargo activity. That increase has helped keep global crude oil prices in check.
Satellite images show Saudi Arabia appears to be ramping up oil loadings inside the Persian Gulf. That’s a sign the world’s largest crude exporter is reorienting shipments amid threats from Yemen’s Houthi militants to its Red Sea exports.
Still, risks remain. A tanker was hit by an unknown projectile in Hormuz this week, the UK Maritime Trade Operations said. The incident is being investigated by local authorities, it said.
Priced ticked up on Wednesday before paring most of those gains after Russian President Vladimir Putin was said to be planning an escalation of his war on Ukraine. Intensified fighting could further snarl supplies from the region, compounding disruptions in the Middle East from the Iran conflict.
“Frequent attacks on Russian oil and refining infrastructure are starting to make a dent in overall Russian oil supply by up to around 10%, with an even larger impact on refined products,” Kavonic said.
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