Tehran awaits US reply on Hormuz deal as crude rises

Iranian Foreign Minister Abbas Araqchi said Tehran expects a US reply today on its latest proposal regarding the Strait of Hormuz reopening.

This maintains a diplomatic avenue open despite US President Trump rejecting Iran's initial seven-day proposal publicly over the weekend. The situation has since become somewhat more complex.

On Monday, US and Iranian officials reportedly held separate meetings with mediators, with future talks anticipated to center on a revised version of Tehran's original proposal. Nevertheless, Iran still conditions the Strait of Hormuz reopening on specific demands. These include a halt to hostilities, sanctions relief, and the removal of the US naval blockade.

Markets cannot entirely eliminate the possibility of some hopeful progress for now. However, the ongoing back-and-forth over many months makes it hard to see a path to compromise. This is particularly the case given conflicting messages from Washington, with Trump continuing to talk of war but also reportedly preparing to ease sanctions.

This uncertainty is reflected plainly in oil pricing.

On Monday, oil prices climbed by over $4 at one point after Trump rejected the Iranian proposal, but they later gave back most of those gains as prospects for further talks revived. WTI crude finished the day lower, settling at around $92.60.

Today, oil prices are moving higher again. WTI is rising by nearly 2% to $94.60 with supply worries still prominent. For oil traders, the next price move will likely be driven by headlines.

A US response indicating progress in negotiations could swiftly revive expectations of a Hormuz reopening and remove some geopolitical premium from oil prices. But another setback would still have the market facing the same issue it has dealt with for months.

Oil flows might be showing some signs of improvement. However, ultimately, a return to normalcy for one of the world's most critical energy routes remains a distant aspiration.