Oil rises amid uncertainty over U.S.-Iran Strait of Hormuz deal

• Brent crude futures gained 1.09% to $84.46 per barrel, while U.S. crude advanced 0.84% to $78.84 per barrel
• Iran has demanded the U.S. meet six conditions including ending the war and aggression before reopening Hormuz, which has been effectively closed for six months
• Additional supply risks remain as Houthi groups continue attacks on Saudi-linked shipping in the Red Sea and Bab el Mandeb, disrupting alternative routes

Market Summary: Oil Rises on U.S.-Iran Strait of Hormuz Uncertainty

Key Price Movements:

• Brent crude futures (October delivery): +1.09% to $84.46/barrel
• WTI crude (September): +0.84% to $78.84/barrel

Main Development:

Oil prices rose Monday amid conflicting signals over a potential U.S.-Iran deal to reopen the Strait of Hormuz. Iranian Foreign Minister Abbas Araghchi denied Tehran is currently in direct talks with the U.S., contradicting earlier Washington assertions that a deal is near.

Critical Conditions:

Iran has reportedly demanded compensation and set six conditions for reopening the strategic waterway, including ending the war and aggression against Iran and its allies, according to Mohammad Bagher Zolghadr, head of Iran's supreme national security council. The U.S. disputes these terms, insisting on unrestricted freedom of navigation without Iranian approvals, tolls, or controls.

Broader Regional Risks:

Beyond the Strait of Hormuz closure, Houthi groups in Yemen continue attacking Saudi-linked shipping in the Red Sea and Bab el Mandeb strait, further disrupting alternative supply routes. According to Citi, risks remain elevated across multiple chokepoints.

Market Implications:

The conflict has now entered its sixth month with the Strait of Hormuz—a crucial oil transit route—effectively closed. Westpac noted that uncertainty remains high, with the Houthi involvement interrupting Red Sea supply alternatives. The combination of the prolonged closure and expanding threats continues supporting elevated oil prices.

Outlook:

Traders face continued volatility as diplomatic uncertainty persists, with no clear timeline for resolving the standoff between U.S. and Iranian positions on reopening this critical energy corridor.