Oil prices hover around $110 as U.S.-Iran tensions simmer after UAE drone strike
Oil prices rose on Monday as tensions between the U.S. and Iran remained high following a drone strike which targeted a nuclear power plant in the United Arab Emirates.
U.S. President Donald Trump warned that the “clock is ticking” for Iran to accept a deal, as reports suggested that the U.S. and Israel are actively discussing more military operations against Tehran. Trump later said in an interview with Fortune that Tehran was “dying to sign” a peace deal.
Brent oil futures for July, the global benchmark, rose 1% to $110.41 a barrel by 06:52 ET (10:52 GMT), while U.S. West Texas Intermediate crude futures gained 1.3% to $102.28 per barrel.
On Sunday, drone strikes caused a fire near the Barakah nuclear plant in the UAE, although no direct damage was done to the main plant.
The UAE blamed Iran or one of its proxies for the attack, calling it a “dangerous escalation.” Iran reportedly launched drone and missile strikes on the UAE earlier this month, as military tensions flared in the Middle East.
Trump had warned last week that a U.S.-Iran ceasefire was on “massive life support,” as attempts at negotiating a peace deal largely fell flat.
Crucially, the Strait of Hormuz has remained closed, with both Iran and the U.S. carrying out blockades of the waterway. This kept oil shipments largely disrupted, fueling a jump in crude prices which have, in turn, exacerbated fears over a spike in inflation in countries around the world.
A U.S.-China summit held last week yielded few new developments on Iran. Trump claimed that China had agreed to buy American oil, but it remained unclear whether a formal agreement had been signed.
Fears of oil supply disruptions remained a major concern, as Hormuz’s closure affected roughly 20% of the world’s oil supply. Shipping data showed traffic through the strait remained at a fraction of pre-war levels.
Adding to concerns over tighter oil markets, the U.S. let a sanctions waiver on Russian oil lapse over the weekend.
The waiver had previously allowed countries to buy Russian seaborne oil, but will now force major oil importers, especially India, to seek new sources of crude.
Russia-Ukraine war adds to oil uncertainty
Separately, the Russia-Ukraine war raged on, also adding to concerns over disruptions in oil supplies.
Ukrainian drone strikes battered Russia over the weekend, with Moscow seen retaliating with its own drone attacks early-Monday.
Reuters reported Russia had struck a vessel headed for loading in a Ukrainian port.
Ukraine was seen repeatedly targeting Russian energy and oil infrastructure in recent months– a trend that could greatly disrupt Moscow’s oil production, as Kyiv seeks to shut off the country’s main source of overseas revenue.
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