Oil prices rose on Monday after Iran and the United States ruled out extending a memorandum of understanding signed in June to end the conflict.
The contract is set to expire on Monday. Meanwhile, a senior Iranian official told Reuters that if diplomacy with the United States fails, Iran will turn to aggression rather than resorting to defense.
usa crude oil Futures rose 2.6% to close at $84.50 per barrel. brent Crude oil prices, the international benchmark, rose 2.7% to settle at $90.87.
“Iran is ready to make decisions and take action on difficult decisions, so Iranian officials must prepare for heightened tensions in the Strait of Hormuz and the wider region,” the Iranian official told Reuters.
On June 17, the United States and Iran agreed to a memorandum of understanding that will open the Strait of Hormuz while a final agreement on Tehran’s nuclear program is negotiated within 60 days.
According to state news agency Tasnim, Iranian Foreign Ministry spokesman Esmail Baghaei denied the possibility of negotiations to extend the memorandum.
“We never started negotiations and the US violated the agreement from the beginning, so the 60-day issue is irrelevant,” Bagai said, according to Tasnim news agency.
Meanwhile, President Donald Trump called on Iran to “raise the white flag of surrender” in an interview with Fox News. President Trump has threatened to bomb U.S. ally Oman for negotiating with the Iranian government over how to control traffic in Hormuz.
“If Oman gets in our way, we will bomb them,” President Trump told Fox.
The president later told reporters in the Oval Office that he would not seek an extension to the ceasefire with Iran.
Shipping traffic through Hormuz came to a near standstill on Sunday, with only three ships crossing the strait, according to data provided by Kupler. The average number of vessel passes over the five days was 12.
Approximately 130 ships had passed through the route by the start of the war on February 28th.
Rapidan Energy President Bob McNally said Brent prices were likely to rise again toward $100 a barrel as China’s imports increase.
China cut imports by 4 million barrels per day to 5 million barrels per day, which played a key role in preventing oil prices from skyrocketing during the Iran war, McNally told CNBC.
However, the Chinese government is likely to allow imports to expand so that refiners can benefit from higher refined product prices, he said.
“China’s exit from its crash diet is not consistent with stabilization of Brent prices,” the analyst said.
