Oil Holds Steady as Iran-US Talks Stall, Hormuz Shipping Slows

Oil prices were largely unchanged on Monday as diplomatic efforts to end the Iran conflict showed no progress, leaving traders to weigh the risk of supply disruptions against the possibility of a resolution.

Brent crude futures inched up 6 cents to $88.58 a barrel, while US West Texas Intermediate fell 18 cents to $82.22. The muted reaction came despite fresh rhetoric from US President Donald Trump, who demanded Iran's surrender and warned of military action against Oman if it interfered.

"The market is definitely taking the Trump remarks in its stride," said John Kilduff, partner at Again Capital. "We have priced in a lot of curtailment to supply already."

A senior Iranian official said Tehran would escalate tensions in the Strait of Hormuz and launch an attack if the US fails to fully implement an interim peace deal within weeks. Monday marked the deadline for a final agreement under a memorandum of understanding signed in June.

Shipping data showed a dramatic slowdown in the strait over the weekend. Only five commodity vessels transited on Saturday, with none registered for Sunday, compared to 31 the previous weekend. Before US-Israeli attacks on Iran began in late February, the waterway handled about one-fifth of global oil and LNG supplies.

Analysts suggest prices are unlikely to move significantly higher unless there is a complete halt in crude flows through the strait at night or a closure of the Bab el-Mandeb Strait. "In the absence of new catalysts, oil prices could continue to consolidate around current levels," said Frank Walbaum of trading platform Naga.com.

Meanwhile, Abu Dhabi National Oil Company sold at least 14 million barrels of spot crude to Asian refiners at premiums, and Saudi Aramco is offering crude outside the strait to some Asian buyers.

Both benchmarks gained more than 5% last week following attacks on tankers operated by ADNOC and a Saudi Aramco refinery. Iranian officials said talks with Oman over managing the strait were continuing but were complicated by multiple actors and countries seeking to undermine the process.