Brent gains as Iran-Oman deal on Strait of Hormuz turns murky

The front-month ICE Brent contract has gained by $3.53/bbl on the day, to trade at $83.03/bbl at 09.00 GMT.

IMAGE: Oil field works and a pumpjack. Getty Images

Upward pressure:

Brent’s price has climbed back above the $80/bbl threshold as Iran and Oman delay finalising a joint agreement to reopen the Strait of Hormuz to commercial shipping.

Tehran’s parliament is ​reviewing the agreement, that will allegedly bar the US, Israeli and ​other “hostile” vessels from ​transiting the region and impose ​fees of up ​to 20% of a ship’s ‌cargo ⁠value.

Iran wants to charge “service fees rather than a toll,” two analysts from ING Bank noted. “There doesn’t seem to be much of a compromise, which ultimately makes it more difficult to reach a sustainable deal,” they said.

There is also little news of progress made in the ongoing US-Iran negotiations, even as President Donald Trump and other senior US officials claim Washington is close to a ceasefire deal.

“Oil prices are seeing renewed strength amid additional signs that a US-Iran deal remains difficult to achieve,” ING Bank’s analysts added.

Downward pressure:

While there are no active downward pressures on Brent’s price today, market participants are tracking the ongoing Oman-mediated talks between Washington and Tehran.

Moreover, market analysts said if the Iran-Oman agreement to reopen the Strait of Hormuz is finalised, it could ease some pressure on the world economy.

The agreement is in its “final stage,” the Associated Press reported earlier.

By Aparupa Mazumder

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