Oil prices gave up early gains on Monday as stalled talks between the United States and Iran revived concerns over prolonged tensions in the Middle East, although the absence of major supply disruptions limited further price increases.
Brent crude futures initially rose by as much as 1 per cent to $89.40 per barrel before easing to $89.28 by 0620 GMT, down 24 cents.
US West Texas Intermediate crude futures also fell, declining 67 cents to $81.74 per barrel.
Both benchmarks gained more than 5 per cent last week following attacks on tankers operated by Abu Dhabi National Oil Company in the Strait of Hormuz and an attack on a Saudi Aramco refinery.
“Oil prices have now rebounded almost completely from the lows seen in early August, as hopes for a more permanent resolution between the U.S. and Iran have faded and geopolitical risk premiums have returned to the market,” said Priyanka Sachdeva, head of market insights at Phillip Nova in Singapore.
Tensions surrounding negotiations between Washington and Tehran remained elevated over the weekend.
Iranian Foreign Minister Abbas Araqchi said Iran had not decided to resume talks with the United States, while US President Donald Trump urged Americans to accept slightly higher gasoline prices while the conflict continues.
Sachdeva said further gains in oil prices could remain limited unless there is clear evidence of renewed aggression in the Strait of Hormuz.
“However, I see limited upside from here unless we get clear evidence of renewed aggression in the Strait of Hormuz, particularly material damage to tankers or oil infrastructure,” she said.
The Strait of Hormuz remains a major focus for oil traders because of its importance to global energy shipments.
Shipping activity through the strategic waterway slowed over the weekend following the tanker attacks, according to ship-tracking data.
Five commodity vessels transited the strait on Saturday, while none were registered on Sunday, according to Kpler data. This compares with 31 vessels during the previous weekend.
The slowdown has raised concerns about potential disruptions to crude and other commodity flows if tensions escalate further.
The United Arab Emirates also accused Iran of attacking a third vessel operated by ADNOC while it was transiting the Strait of Hormuz on Friday, according to the Emirati state news agency WAM.
The UAE had previously blamed Iran for two other incidents involving ADNOC vessels in the strait on Thursday evening.
Despite the heightened geopolitical risk, oil prices have not experienced a sharper rally because there has been no major disruption to physical supply.
Analysts are therefore watching tanker movements and oil infrastructure closely for signs that the conflict could begin to materially affect global crude availability.
For now, the market remains caught between renewed geopolitical risk premiums and expectations that supply will continue to reach consumers.
Any further attacks on tankers or critical energy infrastructure could quickly alter that balance and place additional upward pressure on crude prices.
