LONDON (Realist English). On 12 August, oil prices moved closer to the $90-a-barrel mark amid a deepening diplomatic standoff between the US and Iran.
Brent, the global benchmark, briefly broke above $90 during trading on 11 August, and by the morning of 12 August was trading at around $88.91. Brent’s rally over the past week has exceeded 14% – the sharpest weekly surge since the conflict began.
Price dynamics
| Benchmark | Price (12 August) | Weekly Change |
| Brent | $88.91 – $90.00 | +14.5% |
| WTI | $83.20 – $84.58 | +12.7% |
Both benchmarks closed at their highest levels since 31 July, extending the rally to a sixth consecutive session.
The main driver: Tehran’s hardline stance
The key driver behind the price surge was a statement on 11 August by Iran’s Supreme National Security Council Secretary Mohsen Rezaei, who said the Strait of Hormuz would remain closed until the US changes its behaviour and accepts Tehran’s conditions.
Rezaei confirmed that even an agreement with Oman on a transit route would not automatically open the strait – for that, Washington must fulfil its obligations under the June memorandum of understanding.
Iran’s demands include:
- lifting the naval blockade;
- withdrawal of US troops from the region;
- unfreezing of Iranian assets;
- payment of reparations;
- cessation of regional conflicts.
Trump’s counter-demands
US President Donald Trump, for his part, has made counter-demands, stating that Iran must pay compensation “for all the people they have killed” in conflicts over the past decades.
On Monday, he also indicated that he does not rule out “large-scale escalation.”
As The New York Times notes, Trump’s statement was a response to Iran’s conditions, leaving the diplomatic deadlock even more entrenched.
Shipping in the Strait of Hormuz: collapse
Traffic through the Strait of Hormuz, which before the war handled up to 140 vessels a day, has virtually ground to a halt:
| Indicator | Before the war | Now |
| Daily traffic | 125–140 vessels | 6–8 vessels |
| Oil flow | ~20% of global trade | Virtually cut off |
According to Kpler, only a handful of tankers have transited the strait since the weekend, with many vessels hiding their identities.
US strike on a violating vessel
On 11 August, a US MH-60 helicopter fired missiles at the Panamanian dry cargo vessel M/V Vela Nova in the Gulf of Oman after it ignored warnings and attempted to breach the blockade of Iranian ports.
This is the third such interdiction since the blockade was reinstated on 14 July. The crew was unharmed, but the vessel lost power.
Attacks in the Red Sea
At the same time, Yemen’s Houthis attacked a Saudi vessel carrying military equipment in the Bab el-Mandeb Strait.
According to the UK Navy, a cargo vessel off the coast of Yemen was also struck by an unidentified projectile.
The Red Sea remains dangerous for shipping: Saudi Arabia is unable to fully utilise the alternative route established at the start of the war.
Forecasts and risks
Analysts warn that even in the event of a diplomatic breakthrough, restoring supply chains will take months.
UBS notes that “the physical bottleneck may disappear, but companies will still need to reroute vessels, clear backlogs, replenish inventories and renegotiate contracts.”
According to the EIA, supply disruptions could reach 600,000 barrels per day and persist until the end of 2027.
As DNB Bank analyst Helge Andre Martinsen noted, the market remains “very dependent on headlines” and “it is difficult to have any certainty.”
The price surge to $90 reflects the systemic nature of the crisis: the closure of the Strait of Hormuz, attacks on vessels and the diplomatic deadlock are simultaneously fuelling the “Middle East premium” in prices.
For oil exporters, this is a short-term windfall, but for the global economy, it means recession and inflation risks.
However, the market remains extremely sensitive to news. Any sign of progress in negotiations could send prices crashing as quickly as they rose. The question is whether Washington and Tehran can break the deadlock – or whether the conflict will continue to drive prices higher.
