Key insights
- Reports of a potential US waiver on Iranian oil sanctions pressured oil prices. However, US Treasury Secretary's call to adhere to sanctions and heightened tensions in the Middle East, including drone strikes and blockades of the Strait of Hormuz, create uncertainty. The net effect is slightly bullish for US equities due to potential for higher energy prices and inflation, but tempered by geopolitical risk.
Investing.com - Oil prices turned lower on Monday, but remained above $100 a barrel, after Iranian media reported that the U.S. had proposed a temporary waiver on oil sanctions imposed on the country.
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By 09:11 ET (13:11 GMT), Brent crude futures, the global oil benchmark, had fallen by 1.2% to $107.90 a barrel. U.S. West Texas Intermediate crude futures, meanwhile, had slid by 1.4% to $99.66 a barrel.
The semi-official Tasnim news agency said that the U.S. waiver would be in place until a final peace deal between Washington and Tehran is reached.
Earlier, Iran’s foreign ministry spokesperson said Iran’s demands in negotiations with the U.S. include releasing frozen funds and the lifting of sanctions, Reuters reported.
However, ahead of a meeting of Group of Seven finance ministers this week, Treasury Secretary Scott Bessent said he would call on officials to adhere to a U.S. sanctions on Iran designed to prevent financing from flowing to Tehran.
U.S. President Donald Trump also previously 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 said in an interview with Fortune that Tehran was "dying to sign" a peace deal.
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, with the Strait of Hormuz closure affecting roughly 20% of the world’s oil supply. Shipping data showed traffic through the strait is at a fraction of pre-war levels.
(Ambar Warrick contributed reporting)