Oil prices climb as Iranian demands cloud outlook for Strait of Hormuz

Oil prices are climbing as Iran's demands for reopening the Strait of Hormuz cast a shadow over prospects for global energy market stability. Brent crude, the international benchmark, saw its price rise more than 1 percent on Monday amid market anxiety stoked by Tehran's insistence that the critical waterway will not reopen without major concessions from the United States.

Brent futures for October delivery stood at $83.77 a barrel, representing a significant increase compared to levels before the conflict between the U.S. and Iran began. Analysts note that the lack of concrete progress and lingering questions about any potential agreement are maintaining a risk premium in the price. "Each day that passes without a breakthrough is making traders a little more cautious," Tim Waterer, chief market analyst at KCM Trade, told Al Jazeera.

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The lack of concrete movement, together with lingering questions about the practical details of any agreement, is keeping a risk premium in the price.

Iranian Foreign Minister Abbas Araghchi stated Sunday that while Iran and Oman are close to an agreement regarding the Strait of Hormuz, the waterway's reopening is contingent on Washington meeting certain conditions. These include easing sanctions and paying war reparations. Shipping in the strait, which previously handled about one-fifth of global oil supplies, has collapsed since the conflict started in late February, causing the largest energy disruption in recorded history.

Data from ship-tracking platform MarineTraffic shows a dramatic decrease in vessel transits through the strait. Between eight and 15 vessels crossed daily on August 4, 5, and 6, a stark contrast to the roughly 130 transits that occurred before the conflict. Iran has asserted its right to control shipping in the strait, even threatening to attack commercial vessels using unapproved routes, despite international maritime law emphasizing freedom of navigation. The United Arab Emirates condemned Tehran following what it described as an Iranian missile attack on a vessel owned by the Abu Dhabi National Oil Company. The International Maritime Organization reports at least 64 violent incidents and 17 deaths involving commercial vessels in the region since the war began, with most incidents attributed to Iran.

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Each day that passes without a breakthrough is making traders a little more cautious.