Oil markets opened the week on shaky footing Monday, with early gains evaporating as traders weighed a familiar but unresolved question: how much longer can the Strait of Hormuz stay this tense before it disrupts global supply in earnest?
Brent crude touched an intraday high of $89.40 a barrel, a roughly 1% jump before sellers stepped back in, leaving the contract down 24 cents at $89.28 by 06:20 GMT. West Texas Intermediate told a similar story, sliding 67 cents to $81.74.
The pullback came just days after both benchmarks logged gains of more than 5% last week, propelled by a string of attacks on tankers operated by the Abu Dhabi National Oil Company (ADNOC) in the strait, as well as a strike on a Saudi Aramco refinery.
The whipsaw price action reflects a market caught between two competing signals. On one hand, diplomacy between Washington and Tehran shows no sign of a breakthrough.
Iranian Foreign Minister Abbas Araqchi said over the weekend that Iran had not yet decided whether to resume talks with the United States at all, while President Donald Trump told Americans to brace for modestly higher gasoline prices as the conflict grinds on.
On the other hand, there’s been no fresh, large-scale disruption to actual crude flows, and without confirmation of major supply losses, traders have been reluctant to keep bidding prices sharply higher.
“Oil prices have now rebounded almost completely from the lows seen in early August, as hopes for a more permanent resolution between the U.S. and Iran have faded and geopolitical risk premiums have returned to the market,” said Priyanka Sachdeva, head of market insights at Phillip Nova in Singapore. But she cautioned that further upside looks limited “unless we get clear evidence of renewed aggression in the Strait of Hormuz, particularly material damage to tankers or oil infrastructure.”
That caveat is looking less hypothetical by the day. Ship-tracking data from Kpler, released Monday, showed traffic through the strait has slowed markedly: just five commodity vessels transited on Saturday, and none at all registered for Sunday, a stark contrast to the 31 vessels that made the crossing over the prior weekend.
The chilling effect on shipping traffic is itself a signal of how seriously operators are taking the risk, even without official closures.
Adding to the unease, the UAE accused Iran of striking a third ADNOC-operated vessel as it transited the strait on Friday, according to the state news agency WAM. That followed accusations on Thursday evening tying Iran to two earlier incidents involving ADNOC ships, part of a broader pattern of attacks on tankers in the waterway that has persisted since fighting escalated between the two countries earlier this year.
For now, the market’s message seems to be one of wary equilibrium: prices are pricing in real risk, but not yet outright catastrophe. That could change quickly if Tehran and Washington remain at an impasse or if attacks in the strait, one of the world’s most critical chokepoints for seaborne oil, intensify further.
WHAT YOU SHOULD KNOW
Oil prices are being held up by fear, not actual shortage. With U.S.-Iran talks stalled and tanker traffic through the Strait of Hormuz collapsing, just five ships crossed all weekend, versus 31 the week before; the market is pricing in risk rather than reacting to a real supply loss.
The key thing to watch: prices will likely stay range-bound unless there’s confirmed damage to tankers or oil infrastructure. If that happens, this cautious calm could break fast.
