Oil markets moved sharply higher on Monday after Iran struck what it described as "hostile targets" in the Strait of Hormuz, the narrow waterway through which roughly 20% of the world's oil and liquefied natural gas (LNG) transits, according to Reuters. Brent crude traded above $84 a barrel in early trading on 10 August, having risen more than 5% over the previous three sessions, as investors found little sign that a diplomatic settlement was near, The Edge Malaysia reported.
The strikes, reported by an Iranian news agency, sent US and global benchmark oil futures up more than 1% in post-settlement trading on 5 August, according to Bloomberg. Iranian media separately reported that Tehran intends to seek a ban on US and Israeli ships transiting the strait. Whether this represents a firm policy or an opening negotiating position is not known, Bloomberg noted.
Talks between Iran and Oman — which has been mediating between Tehran and Washington — were reported to be in their final stages as of 7 August, with Brent settling above $83 a barrel that day, according to Bloomberg. No agreement had been concluded by the weekend. On Saturday, Tehran presented Washington with a renewed and extensive list of demands as conditions for a full reopening of the strait. The specific terms have not been disclosed.
President Donald Trump, speaking in an interview with Axios, signalled that Washington was prepared to wait, saying the US could allow Iran's economic pressure to soften its position. The comment did not suggest an imminent shift in the negotiations.
Barbara Leaf, a former assistant secretary of state, offered a more deflating assessment. She told Bloomberg she does not believe Trump's characterisation of the moment as Iran's "last chance" carries credibility. She described reaching durable agreements by November as "exceptionally difficult." She also said that even a limited deal on the strait would simply reset the table for more detailed negotiations on the broader conflict — it would not resolve the underlying war.
The scale of the disruption gives some context to why prices remain sensitive to every headline. The closure of the Strait of Hormuz is estimated to have reduced global oil flows by approximately 11 million barrels per day after accounting for offsetting measures, leaving a net daily shortfall of around 9 million barrels — more than the combined daily oil consumption of the United Kingdom, France, Germany, Spain, and Italy, according to Bloomberg analysis.
The disruption dates to the outbreak of the US-Iran war in early 2026, which triggered the closure of the strait. By late March, Brent had risen roughly 60% since the conflict began, trading near $116 a barrel — below the all-time high of $147.50 set in 2008 but sharply above pre-war levels. On 20 March, Brent settled at $112.19, its highest close since July 2022, as Iraq declared force majeure on oilfields developed by foreign oil firms and the US prepared to deploy additional Marines and sailors to the region.
The market's path since then has been volatile rather than directional. By late June, Brent had erased all of its wartime gains as flows through Hormuz began to recover. That reprieve did not last. Oil surged more than 2% in a single session after a vessel was struck by a projectile in the shipping corridor off the Omani coast, according to Bloomberg. Hostilities escalated further in mid-July, when the US and Iran targeted vessels attempting to transit the strait, pushing West Texas Intermediate (WTI) — the US oil benchmark — to its highest closing price since mid-June, Bloomberg reported.
Monday's move follows the same pattern that has defined this market since March: a geopolitical shock lifts prices; diplomatic signals bring them back; renewed violence or stalled talks push them higher again. What a partial reopening would actually mean for supply volumes remains an open question. The terms of any Iran-Oman arrangement have not been made public, and the extent to which a partial deal would restore meaningful flows has not been assessed.
The market is not pricing in a resolution. It is pricing in the absence of one.
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