TradingKey - On Monday, international oil prices continued to rise as the market remained focused on the prospects of navigation through the Strait of Hormuz and developments in the Middle East. With negotiations between Iran and Oman regarding the resumption of shipping through the strait yet to make clear progress, market concerns over crude supply uncertainties persisted.

Brent crude oil futures ( UKOIL-F) rose 2.65% to $84.38 a barrel; WTI crude oil futures ( USOIL-F) rose 2.22% to $78.75 a barrel.

Source: TradingKey

Recently, the market focus has been on the Strait of Hormuz. Iran stated that negotiations with Oman on establishing a secure shipping channel are close to reaching an agreement, but even if an agreement is reached, it does not mean that normal transit through the strait will resume immediately.

The Strait of Hormuz carries about one-fifth of global oil and natural gas shipments, and therefore its shipping conditions remain an important factor affecting international oil prices.

Regarding the reopening of the strait, there is a clear divergence in the statements of the US and Iran.

US President Trump stated that the US is "keeping a low profile" on the Iran issue and that both sides are in a "semi-negotiation" state. He stated that the US is observing Iran's economic situation and believes economic pressure is a crucial factor at present.

Trump said that the US prefers to continue applying pressure through economic means rather than resuming large-scale military actions. Earlier reports indicated that Trump had called off a new round of planned military strikes against Iran, on the grounds that there was still room to advance negotiations.

Iran, on the other hand, stated that the ceasefire understanding reached by both sides in June this year has not been effectively implemented, so there is currently no basis for resuming direct negotiations.

Iranian Foreign Minister Abbas Araghchi stated that Iran is not currently engaging in direct negotiations with the US, and that information exchange between the two sides is still conducted through intermediaries.

Iran believes the conditions for resuming negotiations are not met until the US stops violating the previous understanding and takes remedial measures. He also stated that some intermediary countries are still pushing for both sides to resume communication.

According to media reports, Iran's conditions include lifting the naval blockade, easing sanctions, and compensation for war damages. An official from Iran's Supreme National Security Council stated that until the relevant conditions are met, the Strait of Hormuz will remain closed.

Meanwhile, the regional security situation remains unstable. Yemen's Houthi rebels stated that they launched attacks on refining facilities in Saudi Arabia's Jizan region. In addition, a tanker operated by the Abu Dhabi National Oil Company was attacked near the Strait of Hormuz. The market believes these incidents could impact crude oil transport and shipping arrangements.

Westpac believes that as the war in Iran enters its sixth month, there remains significant uncertainty in the Middle East. The institution stated that normal transit through the Strait of Hormuz has not yet resumed, and Houthi attacks on shipping near the Red Sea and the Bab-el-Mandeb Strait have also affected alternative transport routes.

Currently, the communication channels between the US and Iran have not been completely severed, but divergences remain over negotiation conditions and implementation arrangements. It remains uncertain when normal shipping through the Strait of Hormuz will resume, and crude supply risks are unlikely to be fully eliminated in the short term.

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