Crude oil opened the week roughly where it has spent most of August: elevated, jumpy and hostage to a stretch of the Persian Gulf that has been reduced to a trickle of shipping traffic. Brent crude changed hands near $88 a barrel Monday morning, down slightly from Friday's levels, while West Texas Intermediate hovered around $81, according to price data reported by FX Leaders. Both benchmarks remain roughly 20-25% above where they traded before the US-Israel war on Iran began in late February, even after pulling back from highs closer to $90 earlier in the month.
The price action reflects a shipping lane that has barely functioned in months. The Strait of Hormuz, which carried about one-fifth of the world's seaborne oil before the war, was crossed by only a handful of vessels in the days around August 14 — down from a pre-war norm of roughly 130 transits a day, according to ship-tracking data from Kpler cited by Baird Maritime. Two of the very large crude carriers that did slip through on Friday were each hauling roughly 2 million barrels loaded weeks earlier from Saudi Arabia and Iraq, evidence that some cargo is still moving even as the overall lane stays nearly shut. The International Maritime Organization has linked at least 64 violent incidents and 17 deaths involving commercial vessels to the conflict since late February.
No breakthrough in sight
Iran has said the strait will not reopen fully until Washington agrees to lift sanctions and pay war reparations, terms the US has so far rejected. Qatar's foreign ministry said over the weekend that Oman-mediated talks between Washington and Tehran were "at an advanced stage," but traders have grown skeptical after repeated rounds without a deal. "Markets have not completely lost hope for a deal, but confidence is clearly eroding," Tim Waterer, an analyst at KCM Trade, said as talks dragged on, according to Al Jazeera. US Treasury Secretary Scott Bessent has said Washington will keep up "unprecedented economic measures" against Iran alongside its naval blockade of Iranian ports.
The standoff is showing up well beyond the futures pits. Friday's disappointing US retail sales report and the sharp drop in University of Michigan consumer sentiment were both linked by economists to rising fuel, food and energy costs — a direct line from the Hormuz blockade to household budgets. The Energy Information Administration has penciled in an average 2026 Brent price of roughly $87 a barrel, implying Washington's own analysts expect the elevated pricing to persist rather than resolve quickly.
Analysts see little reason for a fast fix. Middle Eastern crude production is unlikely to return to pre-conflict levels before early 2027, and absent a diplomatic breakthrough, prices are likely to stay supported in an $85-to-$90 band, according to the Al Jazeera report. For now, energy traders are watching the same headlines as everyone else: whether the Oman-brokered talks produce anything concrete before oil's drag on consumer spending shows up in this week's retail earnings.
