International oil prices rose over 1% on Monday morning amid a stalemate in US-Iran peace talks, intensifying concerns over supply disruptions through the Strait of Hormuz.
At 7:25 am, the June contract of Brent on the Intercontinental Exchange was trading at $107 per barrel, up 1.55% from its previous close. The May contract of West Texas Intermediate on the NYMEX rose 1.51% to $95.83 per barrel.
The diplomatic setback has rattled energy markets already on edge over the blockade, a chokepoint that handles nearly a fifth of global oil trade. Any prolonged disruption threatens tighter supplies, higher prices and deeper strain on major importers such as India.
The second round of negotiations stalled after US President Donald Trump said on Saturday that Washington had cancelled plans to send a team to Pakistan for talks with Iranian counterparts.
Iranian foreign minister Seyed Abbas Araghchi visited Pakistan over the weekend, raising hopes of a diplomatic breakthrough.
In a tweet, he said:
“Very fruitful visit to Pakistan, whose good offices and brotherly efforts to bring back peace to our region we very much value. Shared Iran’s position concerning workable framework to permanently end the war on Iran. Have yet to see if the U.S. is truly serious about diplomacy.”
Hormuz focus
Araghchi has also reached Oman and, in his meeting with Oman’s foreign minister, discussed safe transit through the Strait of Hormuz.
“Appreciative of my gracious hosts in Oman. Important discussions on bilateral matters and regional developments. As only Hormuz littoral states, our focus included ways to ensure safe transit that is to benefit of all dear neighbors and the world. Our neighbors are our priority,” Araghchi said in another tweet early on Monday morning (India time).
The blockade of the Strait of Hormuz has triggered a severe .
Before the war, India sourced 60% of its oil imports, 50% of its liquefied natural gas imports and about 90% of its liquefied petroleum gas imports from West Asia through this strait.
India’s exposure
India imports nearly 90% of its crude oil requirement, making supply disruptions and price volatility a significant macroeconomic risk.
Last week, a petroleum ministry official said that amid elevated oil prices, state-run (OMCs) are losing ₹20 per litre on petrol sales and around ₹100 per litre on diesel.
In a related development, Goldman Sachs Group Inc lifted its oil-price forecasts, citing the risk that a prolonged closure of the Strait of Hormuz may lead to “extreme” inventory draws.
Brent is now expected to average $90 a barrel in the fourth quarter, up from a previous outlook of $80, analysts including Daan Struyven and Yulia Zhestkova Grigsby said in an April 27 note, according to Bloomberg.