WASHINGTON (dpa-AFX) - Extending the sharp gains from Friday's session, crude oil prices have catapulted on Monday as expectations of an early reopening of the Strait of Hormuz began to fade following several preconditions put forth by Iran to the U.S. and the counter-demands by U.S. President Donald Trump, which have increased concerns of re-escalation in the gulf.
WTI Crude Oil for September month delivery was last seen trading up by $4.07 (or 5.21%) at $82.25 per barrel.
On Saturday, the head of Iran's Supreme National Security Council, Mohammad Bagher Zolghadr laid out fresh conditions to the U.S. for Iran to reopen the Strait of Hormuz.
Among the several preconditions, Iran wanted lifting of all U.S. sanctions, an end to military strikes by the U.S. on Iran, and more importantly, compensation for the war-damages.
On Sunday, in an interview with Axios, U.S. President Donald Trump stated that he prefers to see Iran concede to the U.S. demands due to overwhelming economic pressure as against any new military offensive.
Trump stressed that the U.S. is low-keying the dealings with Iran and is only semi-negotiating.
Pointing out that with huge inflation and no money to pay even to the nation's troops, Trump highlighted that Iran is in very bad shape and hence wanted Iran to buckle under the economic pressure arising from the U.S. naval blockade.
Commenting on the progress of negotiations, on Saturday, in an interview with Fox News, U.S. Vice President JD Vance stated that the U.S. is in 'the middle of the game' to ensure the best outcome for Americans.
Today, stressing that compensating Iran was never on the agenda of any of the prior U.S.-Iran discussions, Trump placed a counter-demand seeking compensation for all people killed by Iran, including the deaths of protestors during the rebellions which happened months before.
Experts are now concerned that the Strait of Hormuz closure could go on for an indefinite period, leading to intense crude oil supply-related concerns.
Trump has been alternating his strategies to force Iran to come to the U.S. terms by adopting sudden, intense military offensives on the one hand while allowing diplomats and the intermediaries to continue with their efforts to secure a deal on the other.
Commenting that the back-and-forth swings in the ongoing negotiations are like movements in a chess game, Trump optimistically stated that the strategy will work out finally.
Substantiating his claim, Trump also posted a graph chart through Truth Social showing the exchange value of 1 million Iranian Rial for $1.11.
A Reuters survey revealed that crude oil output by the Organization of Petroleum Exporting countries rose by 1.17 million barrels per day, month on month to 19.85 million bpd.
Today, the global data and analytics company Kpler stated that from August 7 to 9, shipping traffic through the Strait of Hormuz weakened further with confirmed crossings falling from 15 (on Friday) to 11 (on Saturday) and further declining to just 6 (on Sunday).
However, through the Bab el-Mandeb Strait where the risk of attack by Iran-backed Houthis of Yemen has been raised to 'substantial' level, Kpler's data showed that the traffic was comparatively active with 116 crossings sighted during the same period.
Friday's data from the U.S. showing unexpectedly weak hiring across the country lowered the expectations of market participants for any interest rate lowering by the U.S. Federal Reserve.
The U.S. dollar index was last seen trading at 99.81, up by 0.28 (or 0.28%) today.
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