Oil steadied as fresh fighting in Lebanon and attacks on vessels in the Strait of Hormuz muddied the outlook for a deal to end the US-Iran war.
Brent crude was little changed below US$89 a barrel, after gaining 6 per cent last week, while West Texas Intermediate was near US$83.
Lebanon saw its deadliest day of fighting in months on Aug 16, as Israel struck Iran-backed Hezbollah. Wider negotiations between Iran and the US appeared to be at a standstill.
More ships came under attack in Hormuz late last week, including vessels affiliated with Abu Dhabi National Oil Co. Still, Middle Eastern producers are pressing ahead with shuttling large volumes of crude out of the Persian Gulf, with flows running higher than market estimates of 4 million barrels a day, according to people with knowledge of the shipments.
Crude has rallied by more than 40 per cent in 2026, with Washington’s war against Tehran now in its sixth month.
President Donald Trump has signalled that the administration planned to hit Iran’s economy hard, and that he didn’t care whether the conflict ended before the November midterm elections. Treasury Secretary Scott Bessent said the new curbs could be unveiled this week.
Meanwhile, Iran and Oman appeared to be edging closer to a deal on how Hormuz should be managed. However, the US wasn’t party to the talks, and is unlikely to agree to terms that don’t restore free passage along the route that used to handle a fifth of the world’s oil and liquefied natural gas each day.
The waterway is a “God-given geopolitical asset for the Iranian nation and this leverage will never return to its former state”, Iran’s semi-official Fars news agency cited Army Commander-in-Chief Amir Hatami as saying on Aug 16. “We will protect this capacity with all our power.”
Some Asian refiners have been ramping up their crude buying as attacks on chokepoints, which also include threats to shipping in the Red and Black seas, affect supplies. Processors in India are seeking cargoes for as far ahead as November delivery, seeking to lock in barrels sooner than usual, people familiar with the matter said.
Elsewhere, Russia is facing fuel shortages after Ukraine resumed near-daily attacks on oil refineries. That’s prompted at gasoline rationing in at least two regions already, as well as export curbs for refined products. BLOOMBERG
