WTI jumps 3% on Iran conditions for Hormuz reopening

West Texas Intermediate rose 3.20% on Monday and traded around $78.80, with crude oil prices retaining strong daily gains, supported by uncertainty surrounding the reopening of the Strait of Hormuz and persistent tensions in the Middle East. The Strait remains at the centre of market attention due to its strategic importance for world energy supplies. Around 20% of global energy supply passes through the waterway, making the oil market particularly sensitive to the risk of prolonged shipping disruptions. Iran has reiterated several conditions before agreeing to fully reopen the strait. According to Al Jazeera, Mohammad Bagher Zolghadr, Secretary of Iran’s Supreme National Security Council, demanded, among other conditions, an end to the US naval blockade and the withdrawal of US naval and air forces from around Iran. Tehran is also demanding compensation for damage caused by recent conflicts, the lifting of sanctions and the unconditional release of frozen Iranian assets. These demands currently reduce visibility over a rapid normalisation of shipping and help maintain a risk premium in WTI prices. Meanwhile, talks with Oman over establishing a safe shipping route through the Strait of Hormuz appear to be progressing. However, the absence of an agreement on a full reopening keeps investors cautious about the risk of a prolonged disruption to oil flows. Regional tensions are not limited to Hormuz. Yemen’s Iran-backed Houthis have claimed responsibility for a drone attack on a Saudi Aramco refinery in Jazan, Saudi Arabia. The latest attack on major energy infrastructure reinforces concerns about the security of oil supplies in the region. Against this backdrop, developments in negotiations over the Strait of Hormuz remain a key driver for WTI. Signs of an agreement allowing a sustained resumption of shipping could reduce the geopolitical risk premium embedded in oil prices, while a prolonged stalemate or further regional escalation could continue to support crude oil. According to TD Securities, trend-following accounts have shifted back to the buy side, with “CTAs have turned buyers of crude oil and heating oil as a Hormuz deal remains elusive.” The bank notes that “CTAs are starting the week as buyers across WTI and Brent crude, along with heating oil,” as geopolitical risks remain elevated. TD highlights that a “Hormuz deal remains elusive,” while “the Houthis continued strikes on Saudi energy infrastructure, flows via Hormuz and Bab el-Mandeb remain critically choked, and Russian exports and refining remain subdued amid continued Ukrainian attacks,” all of which are helping to underpin prices and CTA length. ING similarly pointed to persistent geopolitical risk, stating that “oil prices remain supported by uncertainty surrounding the Strait of Hormuz.” The bank noted that, while US President Donald Trump said Washington is “semi-negotiating” with Iran, suggesting a focus on economic pressure rather than military escalation, “significant hurdles remain before any broader agreement is reached.” ING added that “reports indicate that Iran and Oman are nearing an agreement on a shipping route through Hormuz, though a full reopening of the waterway is still likely to depend on progress in US-Iran talks.” Despite the supportive backdrop, ING observed that speculative positioning has turned more cautious, with “money managers cut net long positions in NYMEX WTI by 7,257 lots to 101,050 lots, while net longs in ICE Brent fell by 20,361 lots to 164,722 lots, marking a second consecutive weekly decline.” On the fundamental side, ING noted that “US oil activity has continued to recover, with Baker Hughes data showing that the oil rig count rose by three to 454, the highest level since May 2025.” At the same time, “US crude exports remain elevated as buyers seek alternative supply sources, although much of the recent increase has been supported by inventory drawdowns rather than stronger production growth.” (Source: OANDA) The post WTI jumps 3% on Iran conditions for Hormuz reopening appeared first on Financial Mirror.