Bank of America analyst Francisco Blanch noted that a tenfold increase in shipping traffic through the Strait of Hormuz is needed to bring oil prices back to normal levels. Growing uncertainty over whether the US and Iran can reach an agreement to expand shipping through the waterway drove international oil prices higher on Monday.
As of 9:44 AM Eastern Time, US West Texas Intermediate (WTI) crude futures rose 2.4% to $80.03 per barrel, while the global benchmark Brent crude futures also gained 2.4%, trading at $85.53 per barrel. President Donald Trump, in an interview with Axios on Sunday, stated that the US is in a "semi-negotiation" state with Iran, just a week after he insisted talks between Washington and Tehran were indeed taking place. Trump suggested he prefers applying pressure on Iran through a US naval blockade rather than additional airstrikes.
Trump told Axios: "We are just watching the situation in Iran, which has high inflation and is short of money." On August 1, Trump canceled a planned strike against Iran to create space for negotiations. US Treasury Secretary Scott Bessent said in an interview last Tuesday that a deal allowing free passage of ships through the Strait of Hormuz could be reached soon. However, no such agreement has been officially announced as of yet, with both sides maintaining hardline stances.
Iranian Foreign Ministry Spokesperson Abbas Baghaei stated on Monday that the Strait of Hormuz cannot fully reopen for shipping until the US lifts its naval blockade. Quoted by the Tasnim News Agency, Baghaei said: "As long as the US maintains its naval blockade, the necessary conditions for reopening the Strait of Hormuz are not in place." Iran is holding bilateral consultations with Oman on shipping routes through the strait.
On June 17, the US and Iran signed a memorandum of understanding to open the Strait of Hormuz to commercial shipping. However, subsequent disputes over shipping routes led to the rapid collapse of the agreement. Iran has repeatedly attacked oil tankers transiting the strait off the coast of Oman that are under US military protection. In retaliation, the US has launched multiple airstrikes and reimposed a naval blockade.
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