Key Highlights

  • Crude Oil rose to around $79 a barrel on Monday, extending gains from last week as uncertainty over the Strait of Hormuz continued to support prices.
  • Iran and Oman have yet to finalize an agreement to reopen the strait, with Iran's foreign minister saying Tehran is not currently holding direct talks with the United States.
  • Yemen's Houthi militants attacked Saudi Aramco's Jazan refinery for the second time in two weeks, two days after Saudi Arabia signed a new defense pact with Turkey and Pakistan.
  • A tanker operated by Abu Dhabi National Oil Company came under attack in the Strait of Hormuz over the weekend, adding to disruption across both major regional shipping routes.

Oil Extends Gains as Hormuz Talks Remain Unresolved

Crude oil rose to around $79 a barrel on Monday, extending gains from the previous week as uncertainty over the Strait of Hormuz continued to support prices. Iran and Oman have yet to finalize an agreement to reopen the strategic waterway, and conflicting signals from Tehran and Washington have raised doubts over how quickly, or whether, a deal can be reached. Iran's foreign minister said Tehran is not currently holding direct talks with the United States and reiterated that reopening the strait would require Washington to lift its naval blockade of Iranian shipping and provide compensation for war damages. This contrasted with earlier indications from Washington that an agreement could be close, before the administration signaled it was now "low-keying" its approach to negotiations.

Second Houthi Attack on Jazan Refinery in Two Weeks

Yemen's Iran-backed Houthi militants claimed an attack on Saudi Aramco's Jazan refinery on Sunday, using a drone strike the group said was in response to Saudi drones breaching Yemeni airspace over two northern provinces. The Saudi energy ministry confirmed a fire broke out at the Facility but was extinguished with no injuries reported. It was the second attack on the refinery in roughly two weeks; an earlier strike on July 26th had damaged the plant's gasification complex and tank farm area, forcing a shutdown, with repairs expected to be completed around August 15th. The Jazan refinery processes roughly 400,000 barrels of crude per day. Aramco's chief executive has said the attacks have caused only limited, quickly reversible production interruptions with no material operational or financial impact on the company.

The latest strike came two days after Saudi Arabia signed a new defense pact with Turkey and Pakistan, an alliance intended to strengthen collective deterrence amid growing regional instability tied to the broader conflict involving Iran. The pact stipulates that an armed attack against any of the three signatories would be treated as an attack on all, though it remains unclear whether or how Turkey or Pakistan would participate in any Saudi response to the Houthi attacks. The Houthis separately said they carried out missile and drone strikes on the Yemeni Red Sea port city of Mocha over the weekend, targeting forces aligned with the internationally recognized government backed by Saudi Arabia.

Hormuz Tanker Attack Adds to Regional Pressure

A tanker operated by Abu Dhabi National Oil Company came under attack while attempting to transit the Strait of Hormuz over the weekend, underscoring continued risk to shipping through the waterway even as diplomatic talks continue. The combination of unresolved Hormuz negotiations and renewed Houthi attacks on Saudi energy infrastructure has kept pressure on both of the region's major oil shipping corridors simultaneously, contributing to the continued rise in crude prices.