Oil prices rose on Monday after hitting their lowest levels in six weeks, as investors reassessed the prospects of a peace agreement between the US and Iran that could restore energy flows through the Strait of Hormuz. Brent crude climbed toward $93 a barrel after ending Friday at its weakest level since mid-April, while US benchmark West Texas Intermediate traded near $89 a barrel.
The gains came as uncertainty resurfaced around negotiations between Washington and Tehran. Both sides exchanged proposed amendments to a draft agreement over the weekend that would extend the current ceasefire and pave the way for a reopening of the Strait of Hormuz, one of the world's most important oil transit routes. However, there was little indication that a final breakthrough was imminent.
Hormuz Remains the Key Market Driver
Oil markets have swung sharply in recent weeks as traders alternated between fears of prolonged supply disruption and hopes for a diplomatic resolution. Optimism surrounding a potential deal had contributed to crude's first monthly decline of the year. Even after that pullback, however, Brent remains more than 25% higher than levels seen before the conflict erupted in late February.
The near-total closure of the Strait of Hormuz has disrupted global oil flows and injected a significant geopolitical risk premium into prices. The waterway typically handles a substantial share of the world's seaborne crude exports.
US President Donald Trump said after a White House Situation Room meeting on Friday that he expected to announce an extension of the current truce with Iran. Earlier, he reiterated demands that Tehran suspend its nuclear programme and restore the strait to its previous status as an open international shipping route.
Geopolitical Risks Persist
Adding to market concerns, Israel expanded military operations in Lebanon over the weekend as Hezbollah intensified attacks in northern Israel. While Israel is not directly involved in the US-Iran negotiations, the broader regional conflict continues to cloud the outlook for Middle East energy supplies.
Meanwhile, tanker traffic has shown tentative signs of improvement. Roughly a quarter of the non-Iranian large oil tankers stranded in the Persian Gulf when the conflict began have reportedly managed to leave the region, offering a modest sign that supply bottlenecks may gradually ease if diplomatic progress continues.
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