Oil nears $90 as US-Iran peace talks stall
What's the story
Oil prices rose in early Asian trading on Monday, with Brent crude futures increasing to nearly $90 per barrel. The rise comes as tanker traffic through the Strait of Hormuz has slowed down over the weekend. This is due to ongoing tensions between the United States and Iran, with no peace deal in sight yet.
Market response
Brent crude futures rose by 0.7% to $89
The ongoing conflict between the US and Iran has had a significant impact on oil prices.
Brent crude futures rose by 60 cents, or 0.7%, to $89 per barrel in early Asian trade on Monday.
Meanwhile, US West Texas Intermediate crude futures fell by 40 cents to $83 a barrel.
Both benchmarks saw gains of over 5% last week after attacks on tankers operated by Abu Dhabi National Oil Company in the Strait of Hormuz and a Saudi Aramco refinery.
Diplomatic developments
Iran yet to decide on US talks
Iranian Foreign Minister Abbas Araqchi recently said that Iran has not yet decided to resume talks with the US.
Meanwhile, President Donald Trump has asked Americans to bear slightly higher gasoline prices while the conflict continues.
This diplomatic stalemate is contributing to the volatility in global oil markets as shipping through the Strait of Hormuz slowed over the weekend after tanker attacks.
Price prediction
Shipping disruption could lead to significant rise in oil prices
The duration of the disruption in shipping through the Strait of Hormuz will be critical for future crude price trends.
JPMorgan estimates that each additional month of disruption could push Brent prices up by $7-$8/barrel.
Goldman Sachs has warned that if these disruptions continue, Brent could rise to $120/barrel.
However, they also expect tensions in the Middle East to ease eventually, forecasting an average Brent price of $80/barrel for Q4 and $75/barrel next year.