Oil markets caught their breath on Monday, holding largely flat after a turbulent week, as traders weighed cautious optimism over efforts to reopen the Strait of Hormuz against a fresh reminder from Tehran that any resolution remains far from guaranteed.
By 08:07 GMT, Brent crude had edged up 19 cents to $83.74 a barrel, while U.S. West Texas Intermediate ticked up 3 cents to $78.21. The muted moves stood in sharp contrast to last week’s action, when both benchmarks shed more than 7% on growing hopes that Iran and Oman were nearing an agreement that could see the vital waterway reopened to normal traffic.
The strait, before the outbreak of the Middle East conflict at the end of February, had carried roughly a fifth of the world’s oil and liquefied natural gas, making it one of the most consequential chokepoints in global energy markets.
That rally in expectations ran into a dose of reality over the weekend. Iran confirmed on Sunday that talks with Oman had entered their “final stages,” but Tehran was careful to frame this as a step short of resolution.
Iranian officials reiterated that the Strait would only reopen once Washington satisfied a broader set of demands, chief among them, compensation for what Iran has characterized as extensive U.S. military strikes on its territory.
Underscoring the distance still separating the two sides, Iranian Foreign Minister Abbas Araqchi said Sunday that no direct talks were underway between Tehran and Washington, and none would begin so long as the U.S. continues what Iran considers breaches of an interim agreement reached in June.
The remarks served as a pointed signal that Oman’s mediation, however advanced, is no substitute for a broader U.S.-Iran understanding and that markets pricing in a swift reopening may be getting ahead of the diplomacy.
Adding to the sense that de-escalation remains fragile, the Iran-aligned Houthi movement claimed responsibility for striking Saudi Aramco’s Jazan refinery on Sunday, extending a pattern of attacks that has kept Gulf energy infrastructure under persistent threat.
The strike came just two days after Saudi Arabia signed a defense pact with fellow Sunni-majority powers Turkey and Pakistan, a move widely read as Riyadh’s response to deepening regional instability stemming from the U.S.-Israeli military campaign against Shi’ite-led Iran.
The risks to shipping in the strait itself remain acute. UAE state oil company ADNOC disclosed on Friday that 15 of its vessels had come under attack while transiting Hormuz since the conflict began, a figure that illustrates just how contested the waterway has become even amid diplomatic overtures.
Market analysts say the tension between these two narratives incremental diplomatic progress on one hand, continued attacks and unmet Iranian conditions on the other is likely to keep oil prices volatile in the near term.
“Any major progress towards restoring unrestricted shipping could exert downward pressure on oil prices, while a breakdown in negotiations or renewed supply disruptions could quickly revive the geopolitical risk premium,” said Sugandha Sachdeva, founder of the New Delhi-based research firm SS WealthStreet.
For now, traders appear to be treating the Oman talks as a genuine but incomplete step forward enough to have driven last week’s sharp selloff, but not enough, given Iran’s insistence on U.S. concessions and the Houthis’ continued attacks, to justify pricing in a full resumption of normal shipping through one of the world’s most critical energy corridors.
WHAT YOU SHOULD KNOW
Oil prices are holding steady, not because the Hormuz crisis is resolved, but because it isn’t. Iran has floated a near-final deal with Oman, yet is withholding an actual reopening of the strait until Washington meets separate demands, including compensation for U.S. strikes.
With no direct U.S.-Iran talks underway, Houthi attacks continuing, and dozens of vessels already targeted in the strait, the market is right to stay cautious: real de-escalation would send prices lower, but the underlying conflict remains unresolved and could just as easily reignite the risk premium.
