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US Oil Update: Crude Surges as Iran-US Compensation Demands Raise Hormuz Uncertainty

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Crude futures rallied in after-hours trading on Monday as renewed demands between Iran and the US for compensation for damages from the five-month conflict dimmed prospects for an imminent reopening of the Strait of Hormuz.

Front-month West Texas Intermediate crude futures climbed by 5.3% to $82.30 per barrel, while Brent futures advanced by 5.2% to $87.61/bbl.

Gelber & Associates said that Iran has tied renewed commercial passage to broad demands including sanctions relief and compensation, signaling that negotiations mediated by Oman remain far from a resolution.

President Trump said on Monday that he will demand compensation from Iran for Americans killed and wounded in regional conflicts, as Iran seeks financial restitution for damages incurred during the recent five-month military conflict.

Trump said that Iranian officials had raised the issue of compensation for war damages, even though he claimed the topic had not appeared in previous diplomatic meetings.

In a separate post published shortly after, Trump blamed Iran for damages and deaths across the region. "Also, with respect to the Iran negotiations, Iran should be responsible for the damages and death caused to the people of Lebanon, Syria, Yemen, and Gaza," Trump posted.

On Monday, Iran's Foreign Ministry spokesman, Esmaeil Baqaei, said that the US must lift its blockade before Tehran would agree to fully open Hormuz.

Baqaei said that as long as the US naval blockade of Iranian ports continues, the necessary conditions for the reopening of the strategic waterway do not exist.

The opening of the Strait of Hormuz is contingent on the realization of Iran's conditions, Baqaei said, adding that the US has no moral or legal standing to complain about the Strait of Hormuz not being open.

ING strategists said that while President Trump said Washington is "semi-negotiating" with Iran, suggesting a focus on economic pressure rather than military escalation, significant hurdles remain before any broader agreement is reached.

Fueling bullish sentiment, strikes across the region and in the Hormuz have also kept the market on edge. On Saturday, the UAE condemned an Iranian attack on a carrier linked to the country's state energy giant Adnoc while transiting the Hormuz.

On Sunday, Yemen's Houthis attacked Saudi Arabia's Jazan refinery, further adding strain to an already tight global diesel market, as disruptions to shipments through Hormuz deepen the impact of Russia's fuel export ban.

Saxo Bank strategists said that the risk of renewed Middle East escalation remains elevated, but the muted price response highlights competing headwinds from weak Chinese demand and the release of emergency reserves.

Traffic through the Middle East energy chokepoints diverged over the weekend, with MarineTraffic data showing 32 confirmed crossings in the Hormuz between Aug. 7 and 9, while crossings via Bab el-Mandeb held steady at 116 confirmed crossings over the same period.

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