Oil prices likely to rise after failed peace talks

Two empty crude tankers, which attempted to make their way through the Strait of Hormuz and into the Persian Gulf on Sunday, had to make last-minute U-turns as negotiations broke down.

Oil prices are expected to increase once again today following the failure of the US and Iran to strike a peace deal to resolve the conflict and allow for shipping through the Strait of Hormuz to resume.

On Sunday, the US delegation, led by vice president JD Vance, said it was returning home from Pakistan, where direct talks with Iran were taking place, without a deal.

Mr Vance said Iran declined to commit to not pursuing a nuclear weapon.

In response to the breakdown in talks, US president Donald Trump ordered a blockade of the Strait of Hormuz, which will add further pressure on the world’s oil supply.

Around 20% of the world’s oil supply passes through the strait but, last week, it was seeing less than 10% of its normal traffic.

The abrupt end to the negotiations after 21 hours of talks just leaves the two-week ceasefire announced during the week. News of the ceasefire saw the price of oil drop below $100 (€85.22) a barrel and, by close of trading on Friday, it was trading at around $96 a barrel.

However, the failure to reach a deal to end the conflict will likely see prices increase again.

Two empty crude tankers, which attempted to make their way through the Strait of Hormuz and into the Persian Gulf on Sunday, had to make last-minute U-turns as negotiations broke down.

Analysts said oil prices are expected to rise with equities expected to slide.

The chief investment strategist at Danish firm Saxo Markets, Charu Chanana, said the talks ending with a deal is a “setback” and “oil may see fresh gains, risk sentiment takes a hit again, and Hormuz is likely to remain a live choke-point risk even if it is not fully shut”.

Dilin Wu, a strategist at trading firm Pepperstone Group, said: “I would think we will see oil open higher alongside the dollar on Monday due to risk-off”.

“Stocks are expected to take a significant hit and yields to push higher.

“The disappointment that the Strait of Hormuz was still seeing less than 10% of normal traffic was key to me in the last few days.

“Most investors would have been hoping for a lot more shipping to have gone through the strait after the ceasefire was announced.”

Bloomberg