Brent Stabilizes Near $111 Amid Continued Closure of Hormuz

SadaNews - Oil prices stabilized as investors focused on the next steps in peace talks regarding the war with Iran, amidst the almost complete closure of the vital Strait of Hormuz, prolonging the disruptions that have unsettled global markets.

Brent crude traded near $111 per barrel after rising by 2.8% on Tuesday, while West Texas Intermediate crude remained above $99.

U.S. President Donald Trump stated that Iran has requested that the U.S. lift the naval blockade on the strait, while both sides are negotiating to end the fighting that has strangled energy supplies from the Middle East.

Supply Disruptions Drive Prices Up

The Strait of Hormuz has been nearly closed since the start of the conflict in late February, causing energy prices to soar after halting the flow of crude oil, natural gas, and petroleum products from the region.

The war has raised concerns of an inflation crisis, with the International Energy Agency describing the situation as "the largest supply shock in history."

The ceasefire has held since early April, despite the stalemate between the U.S. and Iran regarding peace talks, although the naval blockade appears to be pressuring Tehran. According to the company "Kepler," the country is rapidly depleting its crude oil storage capacity, threatening to accelerate production cuts.

Bloomberg reported that Michelle Bohard, head of policy and geopolitical risk at Kepler, stated, "The stalemate could last for weeks. Either the global market will force Trump to understand that it cannot tolerate this oil shortage any longer, or Iran will be compelled to export its oil."

CNN reported, citing informed sources, that brokers expect Iran to present a revised proposal to end the war in the coming days. Trump said in a post on "Truth Social" that Tehran wants to open the vital waterway for oil shipments "as soon as possible, while trying to resolve its leadership issues."

Washington Continues Pressure

The United States is intensifying its pressure on Iran through other means. The Office of Foreign Assets Control of the Treasury Department warned financial institutions of the risks of sanctions that could be imposed on Chinese oil refineries, most of which are independent refiners in Shandong province, due to their connections with Iran.

On Friday, the U.S. imposed sanctions on "Hengli Petrochemical," one of China's largest private refining companies, for its ties to Iran, a move that signals rising tensions between Beijing and Washington ahead of the anticipated summit between the two countries' leaders. "Hengli" has denied any business dealings with Iran.

The U.S. Treasury also issued "strong guidance" warning of the potential for significant sanctions related to payments to the Iranian government for passage through the Strait of Hormuz.

Bloomberg quoted Dennis Kissler, Senior Vice President of Trading at "PHK Financial Securities," saying: "I believe the United States still has a significantly larger advantage, and Iran feels the pressure of the blockade."