0907 GMT - Oil prices retain a substantial risk premium as Iran and Oman move closer to an agreement over managing the Strait of Hormuz, MUFG's Soojin Kim writes. The U.S. isn't involved in these discussions and continues to demand unrestricted passage through the waterway, she adds. The U.S. is also preparing additional economic tools to wield against Iran, which itself is reportedly strengthening its military capabilities and regional alliances, Kim adds. Overall, continued geopolitical uncertainty and risks to key routes keep a substantial risk premium embedded in crude prices, she says. In mid-morning European trade, Brent crude futures rise 0.4% to $88.86 a barrel while WTI moves 0.1% up to $78.60 a barrel.