Crude oil prices are heading for a sharp weekly decline despite persistent tensions between Iran and the United States and continued disruption to tanker traffic through the Strait of Hormuz.
As at the time of writing 06:55 am (WAT), Brent crude was trading at $89.33 per barrel, down 0.41%, while West Texas Intermediate (WTI) stood at $83.26 per barrel, down 0.32%.
Brent is on course for a 5.3% weekly loss, while WTI is set to decline by about 4.3%. The weakness has persisted even as vessel-tracking data showed tanker traffic through the Strait of Hormuz remained well below pre-war levels.
The market has also failed to sustain gains from fresh US pressure on Tehran. The US Treasury recently announced what it described as the “toughest sanctions in history”, aimed at increasing economic pressure on Iran and forcing the reopening of the strategic waterway.
The latest price decline comes despite the absence of progress towards a lasting US-Iran peace agreement. The Wall Street Journal reported that the Trump administration had repeatedly told mediators it was not interested in returning to the terms of the ceasefire reached by Washington and Tehran in June.
“As the president said, there are no talks or conversations going on, or scheduled, with the Islamic Republic of Iran,” White House spokeswoman Anna Kelly said, according to the Wall Street Journal.
“The naval blockade remains in full force and effect, and Operation Economic Outcast is underway to sever every remaining economic lifeline sustaining the regime.”
However, the impact of Washington’s pressure campaign remains uncertain, particularly because China, Iran’s biggest trading partner, has shown little willingness to support the US sanctions strategy.
China has repeatedly argued that sanctions are not an effective means of achieving political change, potentially limiting the extent to which the latest US measures can restrict Iranian oil exports and broader economic activity.