Global oil prices surge amid Hormuz Strait uncertainty

Global oil prices surged on Wednesday after renewed uncertainty over the outcome of talks to reopen the Strait of Hormuz, following an attack on shipping vessels in the Middle East, with Brent crude climbing more than 2 percent to approach $90 a barrel, according to a report by Al Jazeera.

Brent crude for October delivery settled at $89.61 a barrel, roughly 24 percent higher than levels recorded before the outbreak of the US-Israel war against Iran in late February, according to the report. Tim Waterer, chief market analyst at Sydney-based KCM Trade, said the market has not entirely given up hope for a deal, though confidence is visibly eroding, and warned that prolonged negotiations without tangible progress, coupled with increasingly complex demands, would deepen scepticism about reaching a swift, workable agreement, with early-month optimism gradually giving way to caution and risk-aversion. Roughly a fifth of global oil supply transited the strait before the war, and mixed signals over its reopening have kept prices climbing for the past week.

Diplomatic positions remain sharply divided: Qatar's foreign ministry said Tuesday that talks between Oman and Iran on the strait were in their final stages and that Doha favoured reopening the critical waterway as soon as possible, while Tehran maintains that its discussions with Oman are separate from the strait's reopening, insisting the passage will remain closed until Washington agrees to specific conditions, including war reparations and the lifting of sanctions. US President Donald Trump claimed Tuesday that Washington held full control over the strait, even as shipping traffic through the waterway has nearly ground to a halt compared with pre-war levels -- maritime intelligence firm Windward reported that only ten vessels crossed the strait on Monday, against a pre-war daily average of roughly 130.

Read More: Power situation may improve from evening: State Minister

The US Energy Information Administration said in its latest forecast, published Tuesday, that Middle Eastern oil production is unlikely to approach pre-war levels before early 2027, projecting an average Brent price of $87 a barrel in 2026. Jun Goh, senior oil market analyst at Singapore-based Sparta Commodities, said OPEC crude output could only rise once normal shipping traffic resumed on both sides of the strait, adding that absent fresh diplomatic breakthroughs, prices were likely to remain range-bound between $85 and $90 a barrel given the lack of substantive progress in talks so far.