Oil prices rose on Monday as recent developments between the US and Iran again highlighted the fragility of the interim peace deal signed earlier this month.
The US and Iran have agreed to halt attacks on each other, unidentified senior US officials told Axios, after a days-long outbreak of conflict in the Strait of Hormuz and escalating accusations of ceasefire violations despite an interim peace deal being set in motion. The latest report came into focus only after both sides renewed their tit-for-tat strikes, impacting a Qatar-linked oil tanker and triggering the worst escalation since the initial agreement was signed.
Overall, the back-and-forth on the war front precedes the potential talks between Iran and the US on Tuesday.
Oil prices soar as confusion persists amid US-Iran war talks
As the situation further underscored the uncertainty surrounding the interim peace deal, oil prices rose on Monday. Brent crude futures surged 52 cents, or 0.672%, to $72.51 a barrel by 2313 GMT. Meanwhile, US West Texas Intermediate crude was up 71 cents, or 1.03%, to $69.94 a barrel, according to Reuters.
Renewed attacks between both sides reignited oil supply fears as a fifth of the world’s oil and liquefied natural gas supplies travel. Early Sunday, US Central Command (Centcom) said that fighter jets hit 10 Iranian targets in and near the Hormuz Strait. US officials said that its retaliatory action followed a drone strike on the Panamanian-flagged tanker, the M/T Kiku, which was crossing the channel with more than two million barrels of crude oil.
Rising oil prices took centre stage after Brent crude fell 10.6% last week, marking its third weekly decline. Shipments passing through the Strait of Hormuz soared to their highest level since the ongoing conflict began on February 28. Despite negotiations between the US and Iran to end the war, traffic through the critical route slowed amid last week’s tit-for-tat attacks in the Middle East.
On Friday, however, oil prices hit their lowest levels since the war started, as Brent settled at about $72 and US crude closed around $69.
US and Iran agreed to ‘stand down’ ahead of Tuesday talks: Reports
Multiple reports suggested that the US and Iran would stop attacking each other for the time being and allow ships to pass through the Strait.
An unidentified US official told The Hill over the weekend that both sides agreed to “stand down for now.”
“Technical talks are slated to continue on all areas of the MOU. Both sides will stand down for now and vessels can move freely,” the official said, referring to the memorandum of understanding signed earlier this month.
On the other hand, a senior US official told Axios, “We decided to stop all the kinetic activity,” referring to the attacks that recently made headlines. A second US official reiterated claims that the US and Iran will stand down “for now” and “vessels can move freely” ahead of the technical talks slated for this week.
Both US officials and a third source confirmed reports that the planned meeting was scheduled for Tuesday, according to Axios. Originally, the next round of talks was set to happen in Switzerland, where both sides also agreed last week to establish a “hotline” between the US military and Iran’s Islamic Revolutionary Guard Corps (IRGC).
However, another recent report suggested that delegations from the US and Iran have now agreed to meet in Doha, Qatar, instead. Axios further reported that Nick Stewart, who heads the US technical team, is expected to participate in Tuesday’s talks.
Ceasefire violation accusations erupt amid escalating attacks
All these new developments emerged after Iran asserted ahead of the weekend that safe passage through the Strait of Hormuz could only be assured for ships that coordinated with its government. On the other hand, US President Donald Trump accused Iran of attacking a commercial vessel close to the coast of Oman with a one-way attack drone.
Thereafter, the US Central Command (Centcom) said it retaliated by carrying out more strikes on Iranian targets.
“United States aircraft just struck Iranian missile and drone storage locations, and coastal radar sites, for violating the Cease Fire Agreement, AGAIN!” Trump said on Truth Social.
“It is very possible that they will never learn! There may come a point when we are no longer able to be reasonable, and will be forced to militarily complete the job that we very successfully started. If that happens, the Islamic Republic of Iran will no longer exist!”
According to reports from Iran’s foreign minister, Abbas Araghchi’s Telegram channel, he met with senior Iraqi officials in Baghdad on Sunday and raised accusations about the US and Israel violating parts of the recent MoU. Kuwait and Bahrain, Iran’s neighbouring nations, also reported overnight drone attacks.
In the wake of the escalating attacks in the Gulf, a Pakistani source believed to be involved in the negotiations between Iran and the US earlier told MS NOW that talks had been put on hold.
Nonetheless, as seen above, Trump administration officials have disputed such reports, affirming that negotiations are moving forward as planned. Yet another unspecified US official told CNBC, “Nothing has been cancelled. Technical talks regarding the implementation of [memorandum of understanding] are on track for the coming days as planned.”
Another reiterated: “Technical talks are slated to continue on all areas of the MOU.”