WASHINGTON (dpa-AFX) - Crude oil prices have inched higher on Monday as oil tanker traffic across the Strait of Hormuz increased gradually while the Organization of Petroleum Exporting Countries agreed to increase output. Tension due to differences between the U.S. and Iran despite a ceasefire limited the losses.
WTI Crude Oil for August month delivery was last seen trading down by $0.15 (or 0.22%) at $68.54 per barrel.
Yesterday, after a virtual meeting to review the global energy market conditions, seven countries of the Organization of Petroleum Exporting Countries announced plans to boost oil production.
The member-nations agreed to raise the output by 188,000 barrels per day from August. This is the fifth consecutive increase by the cartel after it began unwinding the production cuts announced in 2023. The alliance agreed to meet again on August 2 to review the scenario.
Since June 17 when U.S. President Donald Trump and Iranian President Masoud Pezeshkian signed an interim Memorandum of Understanding to end their mutual attacks until August 21, oil prices have started to ease.
Following the MoU, the U.S. lifted its sanctions on Iranian oil and petrochemical exports while Iran reopened the Strait of Hormuz which it had shut as soon as the war began.
According to vessel tracking platform MarineTraffic, there were 38 confirmed transits across the narrow seaway on July 2, down from 48 on July 1. Prior to the start of the conflict in the Middle East between the U.S. and Iran on February 28, there were around 130 crossings per day.
Over this weekend, Al Jazeera quoted Iran's Ambassador to China Abdolreza Rahmani Fazil as stating that since the Strait of Hormuz is a part of Iran's territorial waters, Iran intends to charge a fee in some form though not necessarily as tolls.
Iran had earlier warned vessels to sail only through Iran-chartered route maps, failing which Iran would respond forcibly.
Iran's shutting down of the Strait of Hormuz compelled OPEC+ members to scale down their output as the growing backlog of barrels went beyond their crude storage levels.
Fearing being targeted, some operators are moving their vessels near the strait with their transponders switched off and thereby avoid being detected. Hence, the exact number of ships crossing the strait is still not clear.
The initial round of talks between the U.S. and Iranian negotiators concluded last week in Switzerland.
On July 5, citing sources, Dawn reported that Islamabad could be the likely venue for the next round of technical negotiations between the U.S. and Iran. The talks are set to focus on Iran's nuclear program, permanent relief from the U.S. sanctions on Iran, and complete unfreezing of Iranian assets in foreign countries.
Last week, the Wall Street Journal reported that U.S. President Donald Trump is ready to extend the 60-day ceasefire for few more days to discuss Iran's nuclear ambitions, if required. Trump preferred to give diplomacy a full chance before adopting any aggressive measures.
Yesterday, Trump renewed his pressure on Iran and warned that the U.S. will take military action if negotiations fail, and also observed that the U.S. will either secure a deal or 'finish the job'.
A procession for Iran's late Supreme Leader Ayatollah Ali Khamenei began today in Tehran. The body of the slain leader is expected to be buried on Thursday in Mashhad, Iran. Both the U.S. and Iran agreed to resume talks after Khamenei's burial.
Global oil major Aramco of Saudi Arabia announced a steep reduction in its prices, instituting the largest cut in nearly 26 years.
The Official Selling Price of Aramco's flagship Arab Light crude for August deliveries has gone down by $11 per barrel and set the new price at a $1.50 discount to the regional benchmark.
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