(RTTNews) – Partially offsetting the losses from Friday’s session, crude oil prices have surged on Monday as vessel traffic across the Strait of Hormuz dropped due to safety threats following mutual U.S.-Iran attacks over the weekend.
WTI Crude Oil for August month delivery was last seen trading up by $1.36 (or 1.96%) at $70.59 per barrel.
The signing of a Memorandum of Understanding between the U.S. and Iran on January 17 to halt their mutual attacks for a 60-day period paved the way for the immediate reopening of the Strait of Hormuz.
The first round of preliminary discussions concluded in Switzerland on Monday with leaders from both the nations hailing the talks as productive.
The strait was closed early on February 28 when the U.S.-Iran war broke out. The resumption of shipping traffic after the MoU signing eased supply-related concerns, and as a result, crude oil prices started to decline.
Iran continued to exert its authority over the management of Strait of Hormuz. The Iranian government wanted all ships traveling, either through Omanian territorial waters or Iranian territorial waters, to coordinate with Iran’s Islamic Revolutionary Guards Corps and pass only through Iran-prescribed routes, failing which their safety could be endangered. However, the U.S. administration continued to claim that the Strait of Hormuz is free for all international ships.
On Thursday, a Singapore-flagged commercial tanker Ever Loverly passing through Omanian waters was hit by an unknown projectile though no casualties were reported. A United Nations-led initiative to evacuate seafarers safely was suspended after this incident.
Iran claimed the vessel was passing through an unauthorized route, while U.S. President Donald Trump called the strike a foolish act of ceasefire violation.
On Friday, U.S. Central Command struck missile and coastal radar positions. In retaliation, Iran’s IRGC struck U.S. military positions in Bahrain.
Again, on Saturday, a Panama-flagged tanker, Kiku, was struck and damaged by an unidentified projectile but no casualties were reported. The ship carried 2-million barrels of crude oil.
Condemning Iran’s aggression against commercial shipping, the U.S. military targeted Iran’s surveillance infrastructure, communication systems, air defense sites, drone storage facilities, and mine-layer mechanism. Iranian media reported explosions near Tahrui village in southern Iran near the port of Sirik.
According to maritime intelligence firm Kpler, which covers ships with active transponders, 29 commodity vessels crossed the strait on Saturday but only 12 transited on Sunday.
Trump warned Iran to comply with their previous understanding, failing which intense fighting could re-commence that could lead to the destruction of Iran.
Iran wants ships to receive clearance from its authorities irrespective of the route either through Iranian territorial waters or the Omani territorial waters.
The U.S. wants to assure stability in oil and energy prices and hence wants to keep the strait open, while Iran wants to gain the maximum leverage by bringing it under its total control.
Trump announced through Truth Social that Iran has requested a meeting that he stated will take place in Doha, Qatar, tomorrow. Iran denied any schedule of immediate technical negotiations.
Media reports citing U.S. officials stated that the U.S. and Iran have agreed to stand down ahead of the planned next round of talks over this week.
Renewed confrontations have introduced additional uncertainty. Experts are awaiting to see if both the nations can achieve a consensus during the current 60-day window for negotiations to work ways for a permanent settlement.
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