Oil prices rose on Monday as expectations of a breakthrough in peace talks between the United States and Iran faded, along with a slowdown in tanker traffic through the Strait of Hormuz, reinforcing concerns about geopolitical risks in the market.
Brent crude futures rose nearly 1% to $89.40 a barrel, after climbing 72 cents to $89.20 in recent trading by 02:29 GMT, while U.S. West Texas Intermediate crude futures gained 44 cents to $82.83 a barrel.
Both contracts had risen by more than 5% last week, following attacks targeting tankers operated by Abu Dhabi National Oil Company (ADNOC) in the Strait of Hormuz, and a refinery belonging to Saudi Aramco.
Iranian Foreign Minister Abbas Araqchi said earlier this week that Tehran has not yet decided to resume talks with the United States, while US President Donald Trump urged Americans to accept a slight increase in gasoline prices as long as the conflict continues.
Priyanka Sachdeva, head of market analysis at Phillip Nova in Singapore, said that oil prices have now recovered almost completely from their lows in early August, as hopes for a more sustainable solution between the United States and Iran faded, and geopolitical risk premiums returned to the market.
She added that the prospects for higher prices appear limited at these levels, unless clear evidence emerges of renewed hostilities in the Strait of Hormuz, particularly physical damage to tankers or oil infrastructure.
Data released on Monday showed that shipping traffic through the Strait of Hormuz slowed at the start of the week, following attacks on oil tankers.
According to ship-tracking data from Kpler, five cargo ships crossed the strait on Saturday, while no ships were recorded crossing on Sunday, compared to 31 ships at the start of the previous week.
The UAE's official news agency reported that the UAE accused Iran of attacking a third ADNOC-operated vessel as it crossed the strait on Friday, after blaming it for two other incidents involving two ADNOC vessels in the strait on Thursday evening.
