Oil rallies as US-Iran ceasefire hopes fade

Oil prices have climbed again following reports that Iran is severing negotiations with Washington and moving to fully block the Strait of Hormuz.

IMAGE: Getty Images

The development comes shortly after the US military conducted “self-defense” strikes on Iranian radar sites, while Israeli troops moved further inside Lebanon, raising concerns of a broader Middle East conflict.

The ceasefire between Washington and Tehran constitutes a comprehensive cessation of hostilities across all fronts, including Lebanon, Iran’s foreign minister Abbas Araghchi said.

“Any violation of this ceasefire on one front shall be considered a violation of it across all fronts,” Araghchi wrote on social media platform X.

According to a report published by Iran’s state-owned Tasnim news agency, Iranian negotiators have decided to stop diplomatic talks with the US due to the violation of the ceasefire.

The collapse in negotiations has erased the oil market’s confidence – shifting momentum and triggering sharp volatility across prices, analysts said.

“Oil prices received a boost yesterday as talks between the US and Iran appeared to break down – again,” two analysts from ING Bank noted.

Hormuz tension escalates

Oman’s Maritime Security Centre (MSC) has issued an urgent advisory for all vessels to exercise extreme caution after sighting a suspected floating mine within Omani waters in the Strait of Hormuz.

Meanwhile, the US Central Command (CENTCOM) has reinforced its blockade of the Strait of Hormuz, reporting that US forces redirected 121 commercial vessels and disabled five as of yesterday to ensure compliance.

“This has become a common pattern in recent months,” ING Bank’s analysts said. “As a result, oil prices continue to be whipsawed by quickly changing headlines,” they added.

By Aparupa Mazumder

Please get in touch with comments or additional info to news@engine.online