Oil holds near highs as Hormuz shipping talks stall

Oil markets opened the week under pressure from persistent geopolitical risks in the Persian Gulf, with crude prices holding at elevated levels as negotiations over shipping access through the Strait of Hormuz remain incomplete and regional security incidents continue to unsettle traders.

Shipping Corridor Talks Near Completion but Conditions Remain

Iran confirmed that a deal with Oman to establish new shipping corridors through the Strait of Hormuz is nearing completion, but insisted the passage would not fully reopen until the United States meets additional conditions. Tehran continues to demand the lifting of maritime blockades, sanctions relief, and compensation for war-related losses, while refusing direct negotiations with Washington over what it describes as implementation issues with a previously agreed temporary ceasefire arrangement.moomoo+1

WTI crude traded around $79 during Monday's Asian session after failing to sustain momentum from a prior single-day gain of more than 4%, while Brent crude rose 0.6% to around $84. Market analysts characterized the pullback as short-term profit-taking rather than a signal that supply risks have diminished.devdiscourse+1

Houthi Attacks and Regional Instability Sustain Risk Premium

Regional security conditions remain volatile. Yemen's Houthi forces previously claimed responsibility for an attack on Saudi Arabia's Jazan refinery, and a tanker operated by Abu Dhabi National Oil Company was targeted near the Strait of Hormuz. Analysts warn that continued incidents could raise insurance costs for crude shipments and disrupt shipping operations, providing underlying support to prices.moomoo

Israel has also expressed reservations about the Gaza peace proposal put forward by the United States, with key stakeholders disagreeing on specifics of the plan. Given Iran's connections with regional actors, markets anticipate that broader Middle East tensions will continue to feed into oil prices through the risk premium channel.moomoo

TD Securities noted that while markets await a potential diplomatic breakthrough, high-frequency data indicate the global crude balance has shifted back into a pronounced deficit, with refined product markets also remaining tight.moomoo

Indian Markets Feel the Pressure

The ripple effects of elevated crude prices reached Asian equity markets on Monday. India's BSE Sensex dipped in early trade, declining alongside the Nifty 50, as the spike in oil prices driven by geopolitical uncertainty weighed on sentiment. Energy-sensitive stocks were among the laggards in Mumbai trading.bfsi.economictimes.indiatimes

Analysts expect oil prices to remain range-bound but slightly bullish in the near term, with attention focused on U.S. Energy Information Administration inventory data, the pace of shipping recovery through the strait, and whether regional security incidents escalate further.moomoo