Oil prices rise as attacks dent hopes for Strait of Hormuz reopening

Oil prices have jumped as attacks on shipping in the Middle East cast doubt on prospects for a breakthrough in negotiations to reopen the Strait of Hormuz.

Brent crude rose more than 2 percent overnight into Wednesday, taking the international benchmark to close to $90 a barrel.

Brent futures for October delivery stood at $89.61 as of 03:00 GMT, up about 24 percent compared with before the start of the US-Israel war on Iran in late February.

“Markets have not completely lost hope for a deal, but confidence is clearly eroding,” Tim Waterer, chief market ‌analyst at  Australia-based KCM Trade in Sydney, told Al Jazeera.

“The longer talks drag on without visible progress, and the more complex the reported demands become, the greater the scepticism that a workable agreement can be reached quickly,” Waterer said.

“Optimism from earlier in the month is steadily being replaced by a more cautious, risk-premium-driven stance.”

Yemen’s internationally recognised government on Tuesday accused the Iran-aligned Houthis of killing six in missile attacks on a commercial vessel in the Bab al-Mandeb strait, which divides the Arabian Peninsula from the Horn of Africa.

Yemen’s coastguard said the victims included two members of the security forces who had been deployed on a rescue mission following the initial attack.

US Central Command said later in the day that it attacked and disabled a Panama-flagged cargo vessel after it attempted to break the US blockade of Iranian ports.

Oil prices have seen an upward trajectory over the past week amid conflicting signals over the prospects of a deal on reopening the Strait of Hormuz, which carried about one-fifth of global oil supplies before the war.

Qatar’s Foreign Ministry said on Tuesday that talks between Oman and Iran on the strait were at an advanced stage, with Doha wishing to see the waterway reopened “as soon as possible”.

Tehran has said that it considers its talks with Oman to be separate from the issue of reopening the strait, with Iranian officials insisting it will remain closed until the US agrees to certain conditions, including war reparations and the lifting of sanctions.

US President Donald Trump on Tuesday claimed that Washington had total control over the strait, despite maritime traffic remaining at a fraction of pre-war levels.

Just 10 vessels crossed the critical waterway on Monday, according to maritime intelligence firm Windward, compared with roughly 130 daily transits before the war.

In its latest market outlook released on Tuesday, the US Energy Information Administration said it did not expect oil production in the Middle East to return to near pre-conflict levels until early 2027, and for the price of Brent to average $87 a barrel in 2026.

“OPEC crude production can only increase once there is a normalcy in flows in both directions through the Strait of Hormuz,” June Goh, a senior oil market analyst at Sparta Commodities in Singapore, told Al Jazeera.

“Thus, fundamentally, oil prices remain supported at the $85-90 per barrel level barring any new headlines on renewed optimism over the diplomatic talks that have not progressed significantly.”