Oil rose to a three-week high above $110 a barrel in London as traders awaited the US response to a proposal from Tehran to end the war and reopen the crucial Strait of Hormuz.
Brent crude traded rose above $111, bringing the gain this week to almost 6%, while West Texas Intermediate was above $98. US President Donald Trump convened a meeting to discuss Iran’s proposal, but maintained “red lines” on any deal to end the war, including preventing Tehran from obtaining a nuclear weapon.
A ceasefire has broadly held since early April, but blockades by Iran and the US has reduced daily transits of the Strait of Hormuz to near zero. The closure has choked off flows of crude, natural gas and oil products, driving up energy prices and raising concerns about inflation.
“Latest Iran proposal seems to be going nowhere as the US looks unlikely to accept it and oil markets are now grappling with the fact that there will be no quick fix to the blockade,” said Florence Schmit, energy strategist at Rabobank. “A lot of the risk-off sentiment that was driving markets in recent weeks is making way to a bleaker risk-on outlook.”
Iranian media said Sunday that Foreign Minister Abbas Araghchi would convey to Pakistan, which is mediating peace talks, that the conflict could end if the US lifts its naval blockade, agrees to a new legal framework for traffic transiting the strait and guarantees there will be no future military action against Iran.
Trump and his national security team are skeptical of Iran’s proposal but will continue to negotiate, and the White House is likely to offer its response and counterproposals in the coming days, the Wall Street Journal reported, citing US officials it didn’t name. The American president spoke about Tehran being unwilling to meet his key demands of ending nuclear enrichment and vowing never to make a nuclear weapon, according to the report.
Secretary of State Marco Rubio suggested Iran still wanted to retain control of Hormuz and cast that as unacceptable to the US, he said in an interview with Fox News that aired on Monday. Prior to the war, about one-fifth of the world’s oil and liquefied natural gas flowed through the narrow waterway.
Two Iran-linked oil tankers that US forces interdicted near Sri Lanka last week as part of the blockade appear to have halted their westward course in the Indian Ocean and turned around. The American cordon on shipping to and from Iranian ports started on April 13 and has turned away dozens of vessels.
Iran is rapidly running out of places to store its crude, raising the prospect it may be forced to cut output further, according to data analytics firm Kpler. US Treasury Secretary Scott Bessent said in a social media post that the Iranian oil industry was “starting to shut in production” due to the blockade.
“Futures markets are pricing in a prolonged supply tightening scenario and geopolitical risks remain elevated,” said Linh Tran, a market analyst at XS.com in Ho Chi Minh City, Vietnam. Still, “any meaningful progress in negotiations could trigger a sharp correction,” she added.
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With assistance from Charles Gorrivan, Sarah Chen and Charlie Zhu.
This article was generated from an automated news agency feed without modifications to text.
