〈Energy Markets〉Oil Prices Surge Over 5%! U.S. and Iran Exchange Compensation Demands, Hopes for Strait of Hormuz Reopening Fade, Brent Crude Rebounds to $87

Oil prices surged over 5% on Monday (10th), as Iran and the United States exchanged compensation demands, cooling market hopes for the reopening of the Strait of Hormuz. Ongoing attacks on energy facilities in the Middle East and Russia, coupled with U.S. strategic petroleum reserves falling to their lowest level in over 40 years, have reignited supply concerns.

Brent crude futures rose $4.17, or 4.99%, to close at $87.72 per barrel. U.S. West Texas Intermediate (WTI) crude futures gained $3.95, or 5.05%, to settle at $82.13 per barrel. Both benchmark contracts posted their largest single-day gains since July 29.

The sharp price increase was primarily driven by renewed tensions between the U.S. and Iran. Iran stated that the U.S. must lift sanctions and meet several conditions—including compensation and an end to military threats—for normal navigation through the Strait of Hormuz to resume. In response, President Trump demanded that Iran pay compensation for "all those killed and seriously injured."

Currently, no direct negotiations are underway between the U.S. and Iran. Iranian Foreign Minister Araghchi stated that Tehran will not resume talks until Washington complies with the temporary agreement signed in June, which it claims Washington violated. This new divergence in positions casts doubt on the previously anticipated ceasefire and reopening of the Strait.

Iran also announced it is nearing a deal with Oman to establish new shipping routes through the Strait of Hormuz. Iran and Oman are discussing how to create alternative shipping corridors, but Tehran emphasized that sanctions, military threats, and compensation issues must still be resolved. Iran’s Foreign Ministry clarified that current talks with Oman do not yet cover details such as vessel tolls.

The Strait of Hormuz is one of the world’s most critical energy chokepoints. Before the conflict, about one-fifth of the world’s oil and liquefied natural gas passed through this waterway. With navigation safety still under severe threat, any delay in reopening could keep global energy markets under supply risk premiums.

The International Maritime Organization (IMO) has previously warned of maritime security risks in the Strait of Hormuz and surrounding waters. IMO data shows that since the conflict erupted on February 28, 2026, at least 46 attacks on international shipping have been confirmed in the region. The U.S. maritime authority also warns that the risk of attacks on commercial vessels in the Persian Gulf, Strait of Hormuz, and Gulf of Oman remains high.

Kissler, Senior Vice President at BOK Financial, said that the potential delay in a U.S.-Iran peace deal, combined with Ukraine’s continued attacks on Russian refineries and Black Sea tankers, supported crude futures early in the session. He noted that as Iran raises additional demands, the market increasingly believes that short-term supply tightness will persist longer.

Beyond the Strait of Hormuz, other energy facilities in the Middle East face attack risks. The Iran-aligned Houthi rebels in Yemen claimed an attack on Saudi Aramco’s (2222-SE) refinery in Jizan on Sunday.

The Jizan refinery, with a crude processing capacity of 400,000 barrels per day, has had its restart date delayed to August 30 after two recent Houthi attacks. The latest strike occurred just two days after Saudi Arabia signed a defense pact with Turkey and Pakistan, signaling that regional security tensions are escalating.

The UAE’s state-owned oil company ADNOC reported that 15 of its vessels have been attacked while transiting the Strait of Hormuz since the conflict began. Such attacks not only increase energy transportation costs but may also prompt shipping companies to reduce traffic in the region, further constraining available transport capacity.

Meanwhile, Ukraine continues targeting Russian energy infrastructure. Recent attacks hit the Taneco refinery in Tatarstan and the ZapSibNeftekhim petrochemical plant in the Tyumen region. If damage to Russian refining and petrochemical facilities expands, it could further disrupt global supplies of refined products and related chemicals.

Another supply-side warning comes from the United States. U.S. Department of Energy data shows that the Strategic Petroleum Reserve (SPR) declined by approximately 6.1 million barrels last week, falling to 298.7 million barrels—the lowest level since January 1983.

The rapid drawdown of SPR indicates that the U.S. has significantly less strategic inventory available to buffer against geopolitical supply shocks. This makes markets more sensitive to any new disruptions and increases crude price volatility in response to developments in the Middle East.

Oil prices had previously retreated on news that Iran and Oman were close to finalizing arrangements for reopening the Strait of Hormuz, with both benchmarks falling over 7% last week. Now, with both nations exchanging compensation demands, market expectations for a near-term resumption of normal navigation have diminished, and prices have swiftly recovered some of their losses.

Market focus has now shifted from "when the Strait of Hormuz will reopen" to "what conditions are required for reopening and whether commercial navigation can truly resume." Even if Iran and Oman finalize a shipping route agreement, the pace of commercial shipping recovery could remain limited if U.S.-Iran disputes over sanctions, military actions, and compensation remain unresolved.

For global energy markets, the risks around the Strait of Hormuz extend beyond crude oil to include liquefied natural gas, refined products, and other energy commodities. If maritime security issues persist, tanker insurance, freight rates, and rerouting costs could rise, ultimately feeding into higher global energy prices and inflationary pressures.

Therefore, near-term oil price movements will heavily depend on whether U.S.-Iran diplomacy resumes, whether a secure and acceptable shipping corridor can be established through the Strait of Hormuz, and the frequency of attacks on energy facilities in the Middle East and Russia. If these risks persist simultaneously, the supply tightness premium in the crude market could expand further.