Oil settles 1pc higher

HOUSTON: Oil prices settled over 1 percent higher on Monday after volatile trading through the session, as traders weighed hopes of renewed US-Iran negotiations against Yemen’s Houthis imposition of a naval blockade against Saudi Arabia. The Middle East conflict escalated over the weekend, with the US conducting a ninth straight night of attacks against Iran, while US allies Kuwait and Bahrain reported more Iranian strikes. Brent crude futures settled USD 1. 12, or around 1. 3 percent, higher at USD 89. 22 a barrel after hitting USD 91. 42 for their highest since June 11. US West Texas Intermediate crude closed 74 cents, or 0. 9 percent, higher at USD 83. 23 after touching its highest level since June 12 at USD 85. 39. READ MORE: Oil steadies as hopes of renewed US-Iran negotiations offset Houthi threat Mediators have passed Iran a proposal to de-escalate the war with the US, suggesting a 10-day ceasefire to find ways to revive an interim deal reached last month, a senior Iranian official told Reuters on Monday. “While the conflict remains far from resolved, the prospect of renewed talks has eased immediate concerns over further disruptions to oil supply and shipping through the Strait of Hormuz, ” said Daniela Hathorn, Senior Market Analyst, at Capital. com. Yemen’s Iran-aligned Houthis said on Monday they would impose a naval blockade on Saudi Arabia, opening a potential new front against the United States in its war with Iran and raising the threat to global energy supplies and trade beyond the Gulf. “If a ceasefire does not materialize and Hormuz remains largely closed while the Houthi threat to Red Sea shipping intensifies, the risk of a significant rebound in oil prices would be substantial, ” said Rystad Energy’s Jorge León, head of geopolitical analysis, adding that about 2. 5 million barrels per day of Saudi oil is at risk from the Houthi threat. However, a record amount of crude oil on water, estimated around at 1. 35 billion barrels, could limit the next leg of oil price increases, Kpler analysts said in a note. Drop in tanker traffic from gulf The collapse of a US-Iran truce has reignited concerns over energy supplies moving through the Strait of Hormuz. Before the Iran war, about 20 percent of global oil supplies flowed through the waterway. Iran has also pressed the Houthis to close the Red Sea route if the US attacks Iranian power infrastructure. Four vessels made the transit through the Strait of Hormuz on Sunday, down from eight the previous day, LSEG data showed. At least three oil products tankers and one very large crude carrier have entered the strait since Friday to load oil, the data showed. Oil transfers between tankers in waters outside the Strait of Hormuz have slowed following a wave of recent attacks on vessels by Iranian forces, according to satellite analysis and sources. Greek shipping company Dynacom Tankers said two of its managed vessels were hit by projectiles of unknown origin on Monday while sailing off the coast of Oman. Meanwhile, Iran’s Revolutionary Guards said two oil tankers “exploded” and were immobilised after attempting to take what it called an unsafe southern route through the Strait of Hormuz. On Sunday, the Guards also pointed to two ships involved in an “accident” in the same area. It was unclear if the two incidents were related or whether they were connected to attacks on the Dynacom vessels. “The supply narrative has become more bearish. The anticipated recovery in shipping has effectively stalled, with Strait of Hormuz transit volumes falling to single digits, ” ANZ analysts said in a note. Gulf countries boosted crude oil and condensate exports in the first half of July to their highest since before the Iran war began in late February, shipping data showed, though flows through the Strait of Hormuz are slowing as fighting escalates.

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