Brent crude rises above $90 a barrel for the first time since 30 July after US president tells Tehran to surrender
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Oil prices have risen again after the two-month window to negotiate a peace deal in the US-Israel war on Iran expired on Monday with no end to the conflict in sight.
Iran said on Monday that it would take a more aggressive stance if talks with the US failed, while Donald Trump demanded Tehran “put up the white flag of surrender” in an interview with Fox News.
Trump also threatened to bomb Oman if it “gets in the way” of his effort to end the war, the second time he has directed such a threat at the longtime US strategic partner. “If Oman gets in the way, we’ll bomb the shit out of them,” Trump told Fox News on Monday.
Brent crude rose above $90 a barrel for the first time since 30 July, and was trading at $91.63 on Tuesday morning.
Angeline Ong, a senior technical analyst at the investing and trading platform IG, said: “Trump’s threat to bomb Oman could be the moment the oil market shifts from pricing a temporary disruption to pricing a prolonged one.
“If Muscat pulls back from talks with Tehran, the diplomatic route to restoring normal flows through Hormuz narrows considerably. That would be a signal to add to energy longs rather than fade the rally – with roughly a quarter of global seaborne oil normally passing through the strait, even a small reduction in the probability of reopening warrants a higher geopolitical premium in crude.”
A cargo ship was attacked while travelling through the strait early on Tuesday, according to the UK Maritime Trade Operations agency, after an Iranian official told Reuters that it would shift to a “fully offensive” military stance.
Fox News reported on Tuesday that the Iranian military spokesperson Ebrahim Zolfaghari said vessels attempting to pass through the strait would “find several beautiful holes in their hulls”.
Just six commodity ships travelled through the waterway on Monday a ship tracking company. That was slightly up compared with the weekend, when five ships transited on Saturday and Sunday combined
Analysts at Deutsche Bank wrote on Tuesday that the rising oil prices were a sign of investors pricing in “a more extended closure” of the strait.
Trump made the threat against Oman as he struggles to draw the conflict to a close almost six months after it began. But the US president also claimed during Monday’s interview that he was “not in a hurry” to reach a deal.
He has repeatedly claimed the war would end “soon”, and talked up the prospect of a lasting peace deal in recent months, without such a breakthrough materialising. Trump said he would not impose a fresh deadline on Iran, adding: “I have no time schedule. I’m not in a hurry.”
Dan Alamariu, the chief geopolitical strategist at the research company Alpine Macro, warned that if there was no end to the fighting in the Middle East, energy prices could see a “double whammy” from that combined with Russia’s ongoing war in Ukraine.
He said: “Escalation from September through November is likely and could deliver a double shock … even if a bigger two-war convergence remains just a tail risk.
“Energy market risks will persist, and oil and gas prices and volatility would spike with another bout of sustained, intense conflict, especially in the Gulf.”
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