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US Oil Update: Futures Rally as Iran-Oman Talks Stall Over Hormuz Reopening

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Crude futures surged in midday trading on Monday as talks between Iran and Oman over the reopening of the Strait of Hormuz remained elusive, with Tehran outlining strict conditions for reopening the strategic waterway.

Front-month West Texas Intermediate crude futures climbed by 4.3% to $81.52 per barrel, while Brent futures advanced by 4.2% to $87.05/bbl.

ING strategists said that US crude exports remain elevated as buyers seek alternative supply sources, although much of the recent increase has been supported by inventory drawdowns rather than stronger production growth.

President Trump said on Monday that he will demand compensation from Iran for Americans killed and wounded in regional conflicts, as Iranian authorities are seeking 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, a condition Tehran has linked to talks to reopen the Hormuz and end the conflict, even though he claimed the topic had not appeared in previous diplomatic meetings.

"I see that representatives of the Islamic Republic of Iran are asking for compensation for the damage done to them during the last five month military conflict (started because, they will not have a nuclear weapon), even though it was never mentioned in any of our negotiations or meetings," Trump said in a Truth Social post.

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.

Iranian Foreign Minister Abbas Araqchi also said on Sunday that Iran and the US are not currently engaged in talks. "We have no negotiations with America; until America compensates for the violations committed, there is no possibility of resuming talks," Araqchi said.

SEB Research strategists said that the Iranian conflict and the high energy prices are impacting Trump's popularity, thus increasing pressure on the US to reach an agreement ahead of the midterm elections.

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 Group 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.

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