Brent crude settled 3.3 percent higher at 95.82 dollars after President Trump said the United States does not need a deal with Iran, keeping oil traders focused on shipping through the Strait of Hormuz. The remark hardened the American position as attacks on tankers continued, and the price move showed how quickly a single sentence can add a risk premium to crude.
Why it matters
The attacks in the strait have not stopped for the diplomacy. Iran said an LNG tanker hit a mine, and its Revolutionary Guards said they targeted a United States radar in Bahrain. The Revolutionary Guards had already said two oil tankers were disabled by explosions in the strait, and shipping through the chokepoint has nearly stopped as operators and insurers pull back.
The wider market is watching closely. The International Energy Agency said the oil market is set to return to a surplus this quarter for the first time since the United States Iran war began, a shift that could cap prices even while the strait stays dangerous. Buyers are already looking for alternatives, with African liquefied natural gas exports projected to soar as buyers flee Hormuz.
What happens next
The diplomacy has not stopped the incidents. The Abu Dhabi talks produced a prisoner exchange but no ceasefire, and the American envoys have since moved on to Moscow. Until shipping moves freely again, the strait will set the price of crude, and every claim from it will move the market within hours.
For now, the traders are waiting on the next incident. If the attacks continue, oil will keep its risk premium and the alternatives will keep gaining. If they stop, the market will test whether the rebound was real or just fear, and whether the surplus the agency expects can finally hold prices down.
The oil market has been pricing the risk for days. Oil rebounded from two month lows as the tanker attacks offset hopes for an Iran truce, and each new claim from the strait adds to the premium. Traders are watching the flow of ships as closely as the price of crude, because the strait is the chokepoint for the region energy exports.
