Crude oil prices began this week with a gain following a statement by Iran setting six demands for a peace deal with the United States and claims from the Houthis that they had struck an Aramco refinery in Jazan.
At the time of writing, Brent crude was trading at $84.24 per barrel, with West Texas Intermediate changing hands for $78.70 per barrel. Both benchmarks are off their spring peaks but still elevated from pre-war times.
Iran said over the weekend that it will only reopen the Strait of Hormuz if the United States meets six sweeping demands, including a withdrawal of U.S. forces from around Iran, a permanent peace deal, compensation for war damages, and sanction relief, including the release of frozen Iranian assets.
Accepting these demands would be problematic for the Trump administration’s reputation, which means that the chances of such an acceptance taking place are remote. This, in turn, means the Strait of Hormuz will remain closed, and energy commodity prices will stay elevated.
Meanwhile, things remain tense on the other side of the Arabian Peninsula as well, with the Yemeni Houthis claiming an attack on Aramco’s 400,000-bpd refinery in Jazan. According to the Houthis’ military spokesman, Yahya Saree, the refinery was targeted with a drone.
The Jazan refinery had to be shut down in late July following another Houthi attack. At the time, Aramco said it could get it up and running normally again by mid-August.
The Houthis are also targeting Saudi ports on the Red Sea, compromising the security of the kingdom’s alternative export channels for crude and fuels. The latest attack targeted the port of Yanbu, which is handling most of Saudi Arabia’s oil exports, as well as a port controlled by the other Yemeni government, which the West recognizes and which Saudi Arabia supports.
By Irina Slav for Oilprice.com
