Oil prices rise again due to lack of progress in talks to unblock the Strait of Hormuz

Iran and Oman have not signed an agreement to unblock the Strait of Hormuz, so oil prices have resumed their growth, and the intensification of attacks by Yemeni Houthis on tankers in the Red Sea is intensifying the escalation in the Middle East.

 

After Trump's statement about the rapid signing of the agreement to open the Strait of Hormuz, October Brent crude futures fell by 11.4% at the beginning of last week, but by the end of the week they rose again by 5.9% to $83.5/barrel and are now trading 9.9% more expensive than a month ago due to the lack of progress in opening the strait.

 

Iran has said the opening of the strait is possible only after the US lifts its blockade of Iranian ports, and the deal itself does not mean a full reopening of the strait. Iran's semi-official Fars news agency reported that under the proposed agreement to reopen the waterway, ships belonging to the US, Israel or any other country that "harmed" Iran would be banned from passing through the Strait of Hormuz, which would limit oil exports from certain Gulf countries.

 

Oil shipments from Kharq Island, through which 90% of Iranian crude oil is exported, have effectively stopped since July 31. According to analysts Kpler and Energy Aspects, all three loading docks on the island have been empty for a long time, indicating a halt in Iranian oil exports.

 

Of course, the US will not agree to the conditions put forward by Iran for opening the strait, so we expect further delays in negotiations, as Iran has realized that the US cannot and will not resume active military operations due to the lack of interceptor missiles and the threat of hitting both US military bases and allied oil facilities in the region.

 

Yemeni Houthi rebels attacked and sank an Indian cargo ship and then a Saudi tanker in the Red Sea last week, and fired nearly 30 ballistic missiles and drones at the port infrastructure of Mocha in Saudi Arabia over the weekend. In response, Saudi-led coalition airstrikes targeted Houthi launchers, drone depots and drone operator positions in Hodeidah and Taiz provinces, from where the missiles and drones were launched. Meanwhile, Yemeni government ground forces on the southwestern coast launched artillery and mortar strikes on Houthi forward positions and firing points.

 

This means that in order to increase pressure on the US, Iran, through its proxies, is also exacerbating the situation with the passage of ships through the Bab el-Mandeb Strait in the Red Sea.

 

Tensions in the Middle East will remain, and oil price spikes will continue, as Iran, due to high oil and gasoline prices in the US, will try to lower Trump's and the Republican Party's approval ratings in the midterm elections to Congress in the fall, which will force Trump to switch to domestic political processes in the US and postpone the issue of war with Iran.