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EMEA Oil Update: Brent Hits Highest in Over 2-Weeks Amid Collapsing US-Iran Diplomacy

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Brent crude on Tuesday hit its highest since July 30 as diplomatic efforts between Washington and Tehran stalled, stoking renewed supply fears and maritime tensions.

Brent gained more than 1% to $91.84 per barrel and hit its highest since late July, while Murban crude futures closed at $97.70/bbl and were not trading at the time of publication of this update.

"Oil remains supported near $90/bbl by Middle East tensions and attacks on vessels in the Strait of Hormuz," ING analysts said.

Commercial vessel traffic through the Strait of Hormuz slowed to a trickle last week as persistent regional security threats continued to deter operators, while traffic via the Bab el-Mandeb showed improved visibility despite ongoing threats, according to shipping data released Monday.

The latest data from MarineTraffic show that a total of 95 vessels crossed the Strait of Hormuz last week, down 19.5% from 118 during Aug. 2-9.

Iranian Foreign Ministry spokesman Esmail Baqaei reportedly ruled out talks to extend the memorandum of understanding, alleging that the US violated the agreement from the outset, while a senior Iranian official warned that entities must prepare for further regional escalation.

Adding to the friction, President Donald Trump stated that while Iran wants a deal, it will not happen on terms he considers necessary as the US maintains its naval blockade.

"Crude oil prices rose on fading hopes of a peace deal between the US and Iran. Talks appear to be at a standstill, as the 60-day truce expired on Monday," ANZ analysts noted.

Crude prices are likely to test higher in the near term as renewed US-Iran tensions and constrained shipping via the Strait of Hormuz offset bearish signals from rising US crude inventories and strong production, EBW Analytics Group strategists said in a note Monday.

The US Department of Energy's Strategic Petroleum Reserve data released Monday showed SPR inventory levels as of Aug. 14 stood at 293.4 million barrels.

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