Sons of Hormuz not opening causes an increase in oil prices

Iran's new conditions for reopening the Strait of Hormuz have affected hopes for stability in global energy markets, leading to an increase in oil prices. The price of Brent crude, considered the international standard, rose by more than one percent on Monday. Tehran's stance has increased market concerns that the strait will not be reopened until the US grants significant concessions.

As of 7:30 am Greenwich Mean Time, the price of Brent crude futures for October was $84.11 per barrel, up 0.7 percent. The global benchmark's price has risen by about 16 percent since the start of the US and Israel's war against Iran.

Tim Waterer, chief market analyst at KCM Trade in Sydney, Australia, told Al Jazeera, "With no solid progress and questions still surrounding the practical details of any agreement, the extra element of risk to prices remains." He added, "Every passing day without progress is making traders more cautious."

Iranian Foreign Minister Abbas Araqchi said on Sunday that Iran and Oman are close to an agreement on the Strait of Hormuz, but the waterway will not be reopened until certain conditions are met, including the easing of US sanctions on Tehran and compensation for war damages.

Before the war, nearly a fifth of the world's oil supply passed through the Strait of Hormuz, but since the conflict began in late February, maritime traffic in the waterway has almost completely stopped, resulting in the largest disruption to energy supplies in recorded history.

According to Marine Traffic, a platform that tracks ship movements, only 8-15 vessels passed through the Strait of Hormuz on August 4, 5, and 6, compared to around 130 vessels per day before the war. Iran has consistently maintained that it has the right to control maritime traffic in the strait, despite international maritime law considering free passage through sea routes a fundamental principle. Iran has also threatened to attack commercial ships attempting to use unauthorized routes.

On Sunday, the United Arab Emirates condemned Iran for allegedly attacking a ship owned by the Abu Dhabi National Oil Company. The International Maritime Organization reported that at least 64 violent incidents involving commercial ships have occurred in the region since the start of the war, resulting in the deaths of 17 people, with most of the incidents blamed on Iran.

Despite growing uncertainty in energy markets, Asian stock markets saw gains on Monday, with major indexes in Japan, South Korea, and Hong Kong rising. Japan's Nikkei 225 index rose 2.1 percent, while South Korea's Kospi index and Hong Kong's Hang Seng index closed up 0.65 percent and 1.1 percent, respectively.

The gains in Asian markets followed a record high in US stocks on Friday, driven by weaker-than-expected US employment figures, which reduced the likelihood of a US Federal Reserve interest rate hike.

KCM Trade analyst Tim Waterer said the recent rise in oil prices reflects market skepticism about how quickly negotiators can reach a workable agreement to reopen the Strait of Hormuz. He added, "If an agreement is eventually announced, history suggests that such accords can be fragile." He further stated, "The risk of a reversal, even if a deal is reached, is likely to limit any decline in oil prices, even in the event of diplomatic progress."