Oil rises as Strait of Hormuz deal remains elusive after seven weeks

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Oil prices climbed on June 1 as the diplomatic impasse over the Strait of Hormuz stretched into its eighth week, with traders pricing in continued supply uncertainty from the critical waterway through which roughly a fifth of the world’s oil passes daily.

West Texas Intermediate crude, the U.S. benchmark, rose $1.84 to $89.20 a barrel, a gain of 2.1%. Brent crude, the international benchmark, increased $1.55 to $92.66 a barrel, up 1.7%. Both benchmarks have traded in a volatile range since mid-April, whipsawing on each new signal from the negotiating table.

The negotiations trace to April 17, when Iran agreed in principle to reopen the strait under a framework that temporarily eased transit for commercial vessels. Oil prices dropped 9% that day and U.S. stocks hit record highs. Two days later, on April 19, Iran reversed course and re-imposed restrictions, sending oil climbing 6%. The episode crystallized the market’s uncertainty: seven weeks of intermittent talks since then have produced no binding agreement.

President Trump, whose administration has led the U.S. negotiating effort, said on May 25 that talks were “progressing,” without providing details or a timeline. Markets briefly dipped on that remark before resuming their upward trend, reflecting skepticism that the rhetoric would translate into a deal.

“We are pricing in a substantial Hormuz risk premium,” Barclays analysts wrote in a client note. The bank estimated the premium at roughly $8 to $10 a barrel, meaning crude would trade in the low-to-mid $80s if the strait were fully reopened and the risk dissipated.

The prolonged standoff has rippled through energy markets and equities alike. Oil prices spiked to $104 a barrel on May 10 after Trump said the broader U.S.-Iran ceasefire was on “life support,” only to pull back as markets recalibrated. Stocks have been similarly volatile, with major indices swinging on daily headlines about the talks.

In the Asia-Pacific energy sector, the uncertainty has shaped deal activity. Beach Energy and Amplitude Energy have seen their share prices fluctuate in tandem with Hormuz signals, and Ord Minnett analysts have flagged the strait’s status as the dominant variable in regional energy valuations.

The practical consequences extend beyond financial markets. The April 17 reopening was brief enough that gasoline price relief at U.S. pumps never materialized, analysts said at the time. Any future deal would take months to translate into lower consumer prices even under the best circumstances, given the time required for supply chains to normalize and refiners to adjust purchasing patterns.

With no deal in sight and both sides entrenched, traders on June 1 were betting the impasse — and the elevated prices it supports — would continue.