LONDON (Realist English). Oil prices continued to rise on 7 August amid fresh concerns over the terms for opening the Strait of Hormuz.
Iran, which is negotiating with Oman, has proposed imposing strict shipping restrictions, including a ban on US and Israeli vessels and penalties for violators.
The market, which as recently as last week believed a quick diplomatic resolution was imminent, is now pricing in a scenario of a “managed corridor” rather than a full restoration of shipping.
Prices rebound from lows
By Friday morning, Brent had risen to $83.29–83.79 a barrel, gaining about 1%, while WTI was trading in the $77.93–78.33 range. The rise followed a jump of more than $3 on Thursday, when news emerged that Iran’s parliament was considering a bill to ban US and Israeli ships from transiting the strait.
Earlier in the week, Brent had fallen below $80 for the first time since 13 July on hopes of a deal, but those expectations have now given way to disappointment.
Iran’s conditions: bans and fees
According to Iran’s Fars news agency, a parliamentary committee is studying a bill that would:
- ban US, Israeli and other “hostile” state vessels from passing through the strait;
- fine violators up to 20% of the cargo value.
In addition, Iran insists on charging transit fees of 5–7% of cargo value. Oman is discussing a rate of about 3%, while Washington demands the complete elimination of any payments. Four industry sources said the proposed scheme is “unworkable” due to US sanctions and insurance restrictions.
Market no longer expects ‘normal flow’
Analysts stress that the market is reacting not to the mere possibility of a deal, but to its terms. “This is not a market pricing in a bad deal – it’s a market pricing in confirmation that there will be a managed/conditional corridor rather than a restoration of normal flow,” said Lin Ye, vice president at Rystad Energy.
Tim Waterer of KCM Trade noted that the market has already experienced at least one short‑term agreement this year, so confidence that a new pact will fully restore tanker traffic remains low. Vandana Hari, founder of Vanda Insights, added that this week’s signals “left the market in the dark” about exactly what is needed for an agreement.
Escalation on the ground
Rising prices were also fuelled by fresh military incidents. Reports emerged of Iranian strikes on “hostile targets” near the Strait of Hormuz, including explosions near Qeshm Island. Yemen’s Houthis claimed attacks on “Saudi forces” in Marib and Hadhramaut.
A Ukrainian strike on a Russian refinery and a drop in US imports of Saudi oil to zero in July further heightened concerns over global supply.
The oil market is on a rollercoaster ride: just a week ago, prices were falling on hopes of diplomacy, and now they are rising as those hopes have been replaced by the realisation that even if an agreement is reached, shipping through the Strait of Hormuz will not return to its former free‑flow regime.
Iran‑Oman talks continue, but differences over fees, bans and sanctions constraints remain deep. The question is whether the sides can find a compromise before another round of escalation closes the strait for good.
